LP Building Solutions Reports Second Quarter 2021 Results, Provides Capital Allocation Update and Third Quarter Outlook

Louisiana-Pacific Corporation (LP) reported its financial results for the three and six months ended June 30, 2021.

Key Highlights for the Second Quarter

-Net sales increased by 142% to $1.3 billion

-Siding Solutions (formerly referred to as SmartSide^®) net sales increased by 39% to $288 million

-OSB net sales increased by $574 million to $778 million, $554 million of which was due to higher OSB prices

-Net income attributed to LP was $498 million ($4.90 per diluted share)

-Cash provided by operating activities was $457 million

-Adjusted EBITDA⁽¹⁾ was $684 million

-Adjusted Diluted EPS⁽¹⁾ was $4.74 per share

 

Capital Allocation Update

-Paid $465 million in the quarter to repurchase 7.3 million shares of LP common stock

-Since quarter end, as of July 30, 2021, paid an additional $131 million for 2.3 million shares

-Paid $16 million in cash dividends

-Cash and cash equivalents of $603 million as of June 30, 2021

-Declared a quarterly cash dividend of $0.18 per share, a mid-year increase of $0.02 per share or 13%

“All of LP’s segments overcame tightening supply chains to set records for sales and EBITDA in the second quarter of 2021, resulting in $4.74 in adjusted diluted earnings per share,” said LP Chair and Chief Executive Officer Brad Southern. “Siding sales grew by 39% and higher OSB prices resulted in extraordinary cash flow. The Siding capacity expansion project at Houlton is underway and on schedule, and Peace Valley pressed its first OSB board since restarting in late June.”

Second Quarter 2021 Highlights

Net sales for the second quarter of 2021 increased by $777 million (or 142%) over the prior year to $1.3 billion. Siding Solutions revenue increased by $81 million (or 39%) and OSB prices increased by $554 million over the prior year. South America revenue increased by $36 million (94%) over the prior year due to increases in prices. Additionally, EWP revenue increased by $79 million (99%) over the prior year, primarily due to increased pricing to offset increased input costs.

Net income attributed to LP for the second quarter of 2021 increased by $465 million over the prior year to $498 million ($4.90 per diluted share). Adjusted EBITDA for the second quarter of 2021 increased by $587 million over the prior year to $684 million primarily due to the growth in Siding Solutions and the higher OSB prices partially offset by increases in raw material prices, freight costs, and maintenance projects.

First Six Months of 2021 Highlights

Net sales for the first six months of 2021 increased by $1.2 billion (or 107%) over the prior year to $2.3 billion. Siding Solutions revenue increased by $172 million (or 43%) and OSB prices increased by $888 million over the prior year. South America revenue increased by $52 million (71%) over the prior year due to increases in prices. Additionally, EWP revenue increased by $102 million (58%) over the prior year, primarily due to increased pricing to offset increased input costs.

Net income attributed to LP for the first six months of 2021 increased by $752 million over the prior year to $818 million ($7.85 per diluted share) primarily due to the growth in Siding Solutions and higher OSB prices. We recognized debt extinguishment charges of $11 million during the first six months of 2021. During the first six months of 2020, we recognized pre-tax impairment charges of $15 million related to fiber-producing assets.

Adjusted EBITDA for the first six months of 2021 increased by $965 million over the prior year to $1.1 billion, primarily due to growth in Siding Solutions revenue and higher OSB prices.

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).

Segment sales and Adjusted EBITDA for this segment were as follows:

Siding net sales increased by $71 million (or 32%) and $144 million (or 33%) for the three and six months ended June 30, 2021, respectively, compared to the corresponding periods in 2020. These increases are primarily due to Siding Solutions revenue increases of 39% and 43% for the three and six months ended June 30, 2021, respectively, partially offset by decreases in fiber sales.

Adjusted EBITDA increased by $26 million and $75 million for the three and six months ended June 30, 2021, respectively, compared to the corresponding periods in 2020, primarily due to the increase in Siding Solutions revenue, partially offset by increases in raw material prices, freight costs, and mill spending.

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.

Segment sales and Adjusted EBITDA for this segment were as follows:

OSB net sales increased by $574 million (or 281%) and $893 million (or 211%) for the three and six months ended June 30, 2021, compared to the corresponding periods in 2020. OSB prices increased by $554 million and $888 million for the three and six months ended June 30, 2021, respectively, compared to the corresponding periods in 2020. OSB sales volume increased by 8% for the three months ended June 30, 2021, primarily due to the nonoccurrence of last year’s COVID-related downtime. OSB sales volume was flat for the six months ended June 30, 2021. Structural Solutions volume, as a percentage of total OSB segment volume, was 46% for the three and six months ended June 30, 2021, compared to 41% and 42% in the corresponding periods in 2020, respectively.

Adjusted EBITDA increased over the prior year by $519 million and $838 million for the three and six months ended June 30, 2021, respectively, primarily due to higher OSB prices, partially offset by increases in raw material prices and mill spending.

Engineered Wood Products (EWP)

The EWP segment is comprised of LP^® SolidStart^® 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 a by-product of the LVL production process.

Segment sales and Adjusted EBITDA for this segment were as follows:

EWP net sales increased by $79 million (or 99%) and $102 million (or 58%) for the three and six months ended June 30, 2021, respectively, compared to the corresponding periods in 2020. Adjusted EBITDA increased by $15 million and $14 million for the three and six months ended June 30, 2021, respectively, compared to the corresponding periods in 2020. The increases to net sales and Adjusted EBITDA are primarily due to increased pricing to offset increased input costs.

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, Colombia, and Argentina.

Segment sales and Adjusted EBITDA for this segment were as follows:

South America net sales increased by $36 million (or 94%) and $52 million (or 71%) for the three and six months ended June 30, 2021, respectively, compared to the corresponding periods in 2020, primarily due to higher OSB and siding pricing.

Adjusted EBITDA increased by $23 million and $36 million for the three and six months ended June 30, 2021, respectively, compared to the corresponding periods in 2020, primarily due to the higher OSB and siding pricing, partially offset by higher imported raw material and wood costs.

Q3 2021 Outlook and 2021 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 revenue in the third quarter of 2021 to be about 10% higher than the third quarter of 2020

-OSB revenue in the third quarter of 2021 to be sequentially lower than the second quarter of 2021 by about 10%

-Adjusted EBITDA⁽²⁾ for the third quarter of 2021 to be greater than $530 million

-Given our current outlook, we expect capital expenditures for 2021 to be approximately $270 million, including $95 million for the previously announced Houlton mill conversion, $10 million for Peace Valley, $45 million for other strategic growth projects, and $120 million for sustaining maintenance.

For the full 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