LP Building Solutions Reports First Quarter 2023 Results
Louisiana-Pacific Corporation (“LP”), a leading manufacturer of high-performance building products, today reported its financial results for the three months ended March 31, 2023.
Key Highlights for First Quarter 2023, Compared to First Quarter 2022
- Siding Solutions net sales flat at $329 million
- Oriented Strand Board (OSB) net sales decreased by 75% to $189 million, including 63% related to lower OSB prices
- As a result, net sales from continuing operations decreased by 50% to $584 million, including 40% related to lower OSB prices
- Income from continuing operations attributed to LP decreased by $401 million to $21 million ($0.29 per diluted share)
- Adjusted EBITDA(1) was $66 million, a decrease of $532 million
- Adjusted Diluted EPS(1) was $0.34 per share, a decrease of $4.41 per share
(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 $114 million in capital expenditures during the first quarter
- Paid $17 million in cash dividends during the first quarter
- Declared a quarterly cash dividend of $0.24 per share
- Cash and cash equivalents of $126 million as of March 31, 2023
- Closed on the $80 million acquisition of the assets owned by Wawa OSB, Inc. on May 2, 2023
“Single-Family housing starts were down nearly 30% in the first quarter,” said Brad Southern, Chair & CEO. “Despite this challenging market, Siding sales were flat to prior year quarter, with price increases offsetting lower volume, and the OSB segment delivered positive EBITDA. LP’s strategy of growing Siding and operating OSB with flexibility and discipline continues to deliver value.”
Q2 2023 Outlook and 2023 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 second quarter 2023 revenue is expected to decrease year-over-year by up to 5%
- OSB second quarter 2023 revenue is expected to be sequentially higher than the first quarter 2023 by approximately 20%, assuming that OSB prices published by Random Lengths remain unchanged from those published on April 28, 2023 (this is an assumption for modeling purposes and not a price forecast)
- Under these assumptions, second quarter 2023 Adjusted EBITDA(2) is expected to be greater than $80 million
- Given our current outlook, capital expenditures for 2023, excluding the $80 million paid for the Wawa acquisition, are expected to be in the range of $330 million to $370 million, including $140 million to $160 million for the mill conversions, $120 million to $130 million for sustaining maintenance, and $70 million to $80 million for other strategic growth projects
(2) This is a non-GAAP financial measure. With respect to Adjusted EBITDA for the second quarter of 2023, 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, 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, the Company is unable to provide a reasonable estimate of GAAP net income, or a corresponding reconciliation of Adjusted EBITDA to net income.
First Quarter 2023 Highlights
Net sales for the first quarter of 2023 decreased year-over-year by $583 million (or 50%), including a decrease in OSB segment revenue of $555 million, or 75%, due to 66% lower prices and 26% lower volume and a decrease in South America segment revenue of $11 million, or 17%, predominately driven by lower OSB sales volumes and pricing. Siding segment revenue remained flat year-over-year.
Income from continuing operations attributed to LP for the first quarter of 2023 decreased year-over-year by $401 million, or 95%, to $21 million, or $0.29 per diluted share, which reflects a $532 million decrease in Adjusted EBITDA partially offset by a $123 million lower income tax provision
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).
The combined effects of list price increases and customer mix shifts drove year-over-year increases in the average net selling price for the three months ended March 31, 2023. The volume decrease for the three months ended March 31, 2023 was driven by a challenging new home construction market and elevated levels of channel inventory compared to the prior period.
Adjusted EBITDA decreased year-over-year by $15 million in the first quarter of 2023 due to lower volume and $17 million of raw material, freight and labor inflation, partially offset by an increase in the average net sales price.
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® Sub-Flooring). OSB is manufactured using wood strands arranged in layers and bonded with resins.
The year-over-year net sales decrease of $555 million for the three months ended March 31, 2023 reflects a $470 million decrease in OSB prices, a $51 million decrease in sales volume from production curtailments, and a $27 million decrease related in production volume from the conversion of the Sagola mill to Siding production.
The year-over-year decrease in Adjusted EBITDA of $500 million for the three months ended March 31, 2023 reflects lower OSB prices and sales volume (as described above) and increased raw material and wage inflation of $7 million.
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 Chile, Brazil, Peru, Colombia, Argentina, and Paraguay.
South America net sales decreased year-over-year by $13 million, or 17%, for the three months ended March 31, 2023, predominantly driven by lower OSB sales volumes and pricing.
The year-over-year decrease in Adjusted EBITDA of $13 million for the three months ended March 31, 2023 reflects lower sales volumes and pricing as well as higher raw material costs.
For the full first 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™), 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 22 plants across the U.S., Canada, Chile, and Brazil. For more information, visit LPCorp.com.
Aaron Howald – Investor Contact – Aaron.Howald@lpcorp.com – (615) 986-5792
Source: Louisiana-Pacific Corporation