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Louisiana-Pacific (LPX) Q3 Earnings Top, Margin Rises, Stock Up

Higher OSB prices and solid Siding sales aid Louisiana-Pacific's (LPX) third-quarter 2021 earnings.

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This story originally appeared on Zacks

Louisiana-Pacific Corporation LPX — commonly known as LP — grew 6.6% on Nov 2, after it reported third-quarter 2021 results. Both the top and bottom lines surpassed the Zacks Consensus Estimate and grew impressively on a year-over-year basis.

LP chairman and CEO, Brad Southern, said "As expected, the third quarter saw a significant correction in OSB prices and ongoing headwinds from raw material prices and availability. Despite these challenges, LP earned $522 million in EBITDA and $3.87 per share as Siding sales grew by 19%, EWP and South America delivered record quarters, and OSB continued to generate exceptional cash flow."

- Zacks

Detailed Discussion

Louisiana-Pacific’s third-quarter adjusted earnings came in at $3.87 per share, surpassing the Zacks Consensus Estimate of $3.34 by 15.9%. The bottom line also increased 148.1% from the year-ago reported figure of $1.56 per share.

Net sales of $1.22 billion topped the consensus estimate of $1.03 million by 18.5% and improved 53.3% from the year-ago period. The upside was driven by solid segmental results.

Single-family housing starts increased 3.5% year over year. Multi-family starts improved 21.2% from the prior year.

Segmental Analysis

Siding: The segment’s sales of $312 million were up 16% from the prior-year period. The upside was due to increased sales volume, price and product mix. Also, a 19% increase in Siding Solutions (formerly known as SmartSide) revenues supported the growth. Adjusted EBITDA fell 4% from the prior-year quarter to $73 million due to increased costs for raw materials, freight, maintenance, and higher investments in sales and marketing.

OSB: Sales in the segment increased 63% year over year to $600 million. The company’s adjusted EBITDA also jumped 102% from a year ago to $381 million. Substantially higher OSB prices and higher volumes aided the segment.

EWP: Segment’s sales grew 95% year over year to $201 million. Adjusted EBITDA increased a whopping 367% year over year to $42 million. Increased pricing in response to rising input costs led to the top-line growth.

South America: Sales of $76 million rose 69% and adjusted EBITDA grew 236% from the year-ago quarter to $37 million due to higher OSB and siding pricing, partially offset by increased imported raw material costs.

Operating Highlights

Gross margin expanded 830 basis points (bps) year over year to 45%. Adjusted EBITDA of $522 million was up 91.2% from the prior-year figure of $273 million. The upside was primarily due to growth in Siding Solutions and higher OSB prices, partially offset by intense inflation.

Financials

As of Sep 30, 2021, Louisiana-Pacific had cash and cash equivalents of $607 million compared with $535 million at 2020-end. Long-term debt was $346 million, down from $348 million at 2020-end.

For the third quarter, net cash provided by operations was $511 million, up from $218 million reported in the year-ago period.

Q4 Guidance

For fourth-quarter 2021, the company expects Siding Solutions revenue growth to be 5% from the year-ago period. OSB revenues are expected to sequentially fall 30% owing to average OSB price. It anticipates consolidated adjusted EDITDA of more than $200 million.

Given the current scenario, Louisiana-Pacific now expects capital expenditures for 2021 to be $250 million ($270 million expected earlier). Meanwhile, the company reiterated its second-half 2021 guidance for Siding Solutions revenue growth of 10% and EBITDA margin of 25%.

Zacks Rank & Peer Releases

Louisiana-Pacific — which shares space with Trex Company, Inc. TREX in the Zacks Building Products - Wood industry — currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Weyerhaeuser Company WY reported third-quarter 2021 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate despite weather-related operational disruptions, persistent supply-chain challenges and the ongoing pandemic. Both the metrics improved on a year-over-year basis buoyed by operational excellence initiatives, solid momentum in U.S. housing, and robust repair and remodel demand.

UFP Industries, Inc. UFPI reported stellar results for third-quarter 2021. Both earnings and net sales beat the Zacks Consensus Estimate as well as improved impressively on a year-over-year basis. The uptrend was mainly driven by the diversity of markets and an improved pricing model that quickly adjusts to lumber market fluctuations.



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