Siding sales up, OSB down at LP
Louisiana-Pacific Corporation (LP) has reported its financial results for the three and nine months ended September 30, 2024. Highlights include (all comparisons from Q3 of 2023):
- Siding net sales increased by 22 percent to $420 million.
- Oriented strand board (OSB) net sales decreased by 24 percent to $253 million.
- Consolidated net sales decreased by 1 percent to $722 million.
- Net income was $90 million, a decrease of $27 million.
- Net income per diluted share was $1.28 per share, a decrease of $0.35 per share.
- Adjusted EBITDA was $153 million, a decrease of $37 million.
- Cash provided by operating activities was $184 million, a decrease of $3 million.
"LP’s teams executed our strategy to drive growth, margin, specialization and efficiency in the third quarter,” said LP CEO Brad Southern. “As a result, the Siding segment set new records for net sales and adjusted EBITDA, and the OSB segment delivered a solid quarter in a challenging price environment with operational efficiency, cost control and outstanding safety.”
Southern shared additional context and commentary with LP shareholders. On the Q3 earnings call, Southern laid out LP's view of the current building landscape, sharing: "The new home construction market is slowing somewhat with the combined effects of the recent rebound in mortgage rates. And the approach of colder weather, housing starts have leveled at about 1.4 million in recent months, which is also the current consensus for next year."
However, Southern notes that "LP is over-indexed to single-family starts."
Despite sputtering starts, Southern believes the outlook for repair-and-remodel looks rosy moving forward. Southern explains: "The recently published leading indicator of remodeling activity published by the Harvard Joint Center for Housing studies suggests that R&R spending has bottomed and projects a return to positive year over year growth in 2025."
Given that about a third of LP smart side siding goes for R and R applications, Southern told shareholders, "this is a positive development."
Southern also addressed raising prices. "We have announced the price increase for next year in siding, and that will be a factor as we manage year-end shipments to position our sales and the channel for a strong start to 2025."
Looking forward, Southern says, interest rates and affordability remain the dominant macroeconomic factors to watch, though the lack of housing supply and the aging housing stock are also elephants in the room.
"We believe that LP is uniquely well positioned to address these needs. And as a result, we are confident that we will continue to grow siding and structural solutions in 2025 and beyond," he concluded.
First nine months of 2024 highlights
Net sales for the first nine months of 2024 increased year-over-year by $338 million (or 18 percent). Siding revenue increased by $200 million (or 20 percent), due to 6 percent higher prices and 14 percent higher volumes.
OSB revenue increased by $164 million (or 22 percent), driven by 8 percent higher prices and 12 percent higher volumes.
Net income increased year-over-year by $239 million to $358 million ($5.00 per diluted share). The increase primarily reflects a $215 million increase in adjusted EBITDA, $49 million of changes in business exit credits and charges, and $16 million of prior year settlements of OSB patent-related claims. This was partially offset by a $50 million increase in the provision for income taxes. The year-over-year increase in adjusted EBITDA includes a $117 million impact from higher Siding net sales, $47 million due to higher OSB selling prices and a $53 million impact from higher OSB sales volumes.
Click here for LP's full Q3 2024 financial report.
