What Louisiana-Pacific (LPX) Said on Its Q3 Earnings Call

Key Points

• Siding delivered record revenue of $473 million, up 7% year over year, as volume rose 2% and prices increased 5%. Inflation in raw materials and freight weighed on results, but siding remained modestly price-cost positive.
• OSB generated $180 million in revenue and a $24 million EBITDA loss amid soft demand and input-cost pressure. LP will indefinitely curtail its Jasper mill and temporarily idle Maniwaki, and expects a fourth-quarter OSB EBITDA loss of about $35 million.
• LP raised the lower end of its full-year outlook, projecting total EBITDA of $270 million to $280 million. It is also transitioning to a broader siding distribution network over the next two or three quarters, aiming to expand market reach while limiting inventory-related volume distortions.

Louisiana-Pacific NYSE: LPX reported third-quarter results marked by record siding revenue, modest volume growth and continued pressure from inflation in raw materials and freight, while the company moved to reduce OSB capacity amid softer market demand.

Chief Executive Officer Jason Ringblom said siding volume increased 2% year over year and siding net sales rose 7%, exceeding the high end of the company’s guidance range despite a 2% decline in single-family housing starts. The quarter established a record for siding revenue, he said.

Total company net sales rose $28 million from a year earlier to $691 million. EBITDA was $82 million, flat from the prior-year period, while operating cash flow totaled $112 million. Louisiana-Pacific invested $56 million in capital expenditures and returned $21 million to shareholders through dividends during the quarter.

Siding Results and Inflation Pressures

Siding revenue reached a record $473 million in the third quarter, with adjusted EBITDA of $119 million and an adjusted EBITDA margin of just over 25%, according to Chief Financial Officer Aaron Howald.

Average siding selling prices increased 5% from a year earlier, contributing $23 million to revenue and EBITDA. Howald said the increase was primarily driven by list-price increases as earlier rebate and mix benefits normalized. Higher volumes added $8 million in revenue and $4 million in EBITDA.

However, inflation remained a substantial headwind. Higher raw-material costs reduced siding EBITDA by $12 million year over year, primarily reflecting MDI resin and paper overlay costs. Higher fuel prices and constrained trucking capacity added another $6 million in freight-related EBITDA pressure.

“Despite these inflationary pressures, siding remained modestly price-cost positive in the third quarter,” Howald said. Planned maintenance projects and lower inventory levels during outages accounted for an additional $9 million in other costs.

ExpertFinish volume declined slightly during the quarter, though the product represented 10% of siding volume and 16% of siding revenue. Ringblom said distributors reported year-over-year ExpertFinish sell-through growth of 8% in the third quarter, and sell-through rose 13% sequentially from the second quarter. Prime SmartSide sell-through was comparable with the prior year, he said.

Distribution Overhaul and Builder Relationships

The company announced a broad restructuring of its siding distribution network in early October. Under the updated model, Specialty Building Products will provide expanded nationwide coverage for SmartSide and ExpertFinish, while regional distribution partners will serve designated markets.

Ringblom said the strategy is intended to simplify and expand Louisiana-Pacific’s network with distribution partners that are aligned with SmartSide as their hard-cladding offering. The network includes existing partners such as BlueLinx, Coastal Forest Products, J.M. Thomas Forest Products, Taiga Building Products and Weyerhaeuser, among others. Forest Products Supply Company and Palmer-Donavin were added as new partners.

The transition will occur in phases over the next two or three quarters, according to management. Howald said the company expects minimal costs from the change and is attempting to avoid a material one-time volume increase tied to channel inventory loading.

“Our goal as we make this transition is to make it clear that the volumes that we ship are reflective of true end-use demand,” Howald said.

Ringblom said the expanded distribution footprint includes more than 100 locations and 12 or 13 partners, with field-sales resources that can extend Louisiana-Pacific’s own sales force and support downstream demand creation. He said the company expects greater geographic reach and distributor exclusivity to be long-term benefits, while acknowledging that the transition could create near-term noise.

The company also highlighted Taylor Morrison naming LP its New Strategic Vendor of the Year. Ringblom said Louisiana-Pacific has worked with the homebuilder to develop an enterprise program that leverages its broader product portfolio and improves access to underpenetrated markets.

OSB Curtailments and Market Conditions

In the OSB business, Louisiana-Pacific reported revenue of $180 million and an EBITDA loss of $24 million. Average OSB selling prices were modestly lower than a year earlier, reducing revenue and EBITDA by $7 million each, although prices rose late in the quarter and the company expects improved realizations in the fourth quarter.

OSB volume increased 7%, but unfavorable mix reduced EBITDA by $1 million. Raw-material and labor inflation created a further $7 million year-over-year EBITDA headwind.

Results included $17 million in other EBITDA benefits, including $14 million from inventory valuation adjustments as higher quarter-end prices supported favorable lower-of-cost-or-market adjustments. Operational and cost-discipline measures contributed another $3 million.

Louisiana-Pacific said it will indefinitely curtail its Jasper, Texas, mill and temporarily idle its Maniwaki, Quebec, mill during the fourth quarter. Howald said the actions were a response to ongoing demand softness and part of the company’s capacity-management strategy. He added that the temporary Maniwaki shutdown does not affect its potential as a future siding location.

Ringblom said the company had operated its network at about 75% utilization before the announced curtailments and took the actions to better position the business for a potential further downturn in OSB demand.

Updated Fourth-Quarter and Full-Year Outlook

For the fourth quarter, Louisiana-Pacific expects siding revenue of $390 million to $400 million and SmartSide EBITDA of $80 million to $90 million. Management expects roughly 3% siding growth, driven mostly by price and partly offset by negative mix effects.

The company said its fourth-quarter outlook reflects expected seasonal maintenance outages, continued inflation and a measured approach to inventory loading during its distribution transition. Ringblom said the company is seeking to avoid repeating the inventory-related challenges it experienced in the fourth quarter of the prior year.

Louisiana-Pacific raised the lower end of its full-year outlook and now expects:

• SmartSide revenue of $1.66 billion to $1.67 billion, down about 1% year over year.
• SmartSide EBITDA of $415 million to $425 million.
• An OSB EBITDA loss of about $95 million for the full year.
• Total company EBITDA of $270 million to $280 million.

For the fourth quarter, the company expects an OSB EBITDA loss of about $35 million if prices remain at current levels. Howald said lower volumes from curtailments, relatively weaker pricing in some products and continued input-cost pressures will weigh on OSB results, while the favorable inventory-related effects recorded in the third quarter are largely nonrecurring.

Management said it was not providing formal 2027 guidance, but cited Louisiana-Pacific’s historical ability to outperform single-family housing starts by about 4% on SmartSide volume. The company also expects price increases announced in October to begin affecting shipments in early to mid-January, with management anticipating price-cost performance will be positive in 2027 unless raw-material conditions deteriorate substantially.

About Louisiana-Pacific (NYSE:LPX)

Louisiana-Pacific Corporation NYSE: LPX is a manufacturer of building products used in residential, repair and remodeling, and outdoor construction. The company produces engineered wood products designed for use in structural framing, exterior siding, trim, and other building applications.

Its product portfolio includes LP SmartSide siding and trim, oriented strand board and other structural panel products, and solutions for outdoor buildings and construction projects. Louisiana-Pacific markets its products through building-material distributors, retailers, and specialty dealers.

Founded in 1972, Louisiana-Pacific is headquartered in Nashville, Tennessee.

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