LOUISIANA-PACIFIC CORP Q3 FY2024 earnings call

• LP's teams executed strategy effectively in Q3. Siding net sales grew 22% with new sales and EBITDA records, and OSB operated safely with strong price realization. - Market-wise, new home construction market slowed but repair and remodeling spend outlook improved. Inventories were within normal seasonal ranges. - LP published environmental product declarations for SmartSide Trim and Siding portfolio, making them carbon negative. LP earned the 2023 Safest Company Award from APA, 12th time in 16 years with five mills winning individual safety recognitions.

LP's Siding net sales grew by 22% to $420 million, setting new records for sales and EBITDA. Siding contributed 58.2% of the total net sales of $722 million. Siding's EBITDA was $123 million, a record. The OSB business operated safely and efficiently with strong price realization, though lower commodity OSB prices impacted net sales. ExpertFinish had another record quarter for both revenue and margin, driven by higher volumes and efficiency improvements at pre-finishing facilities, contributing significantly to Siding's positive price/mix.

• Fourth quarter Siding revenue is expected to grow between 9% and 10% to about $365 million, with Siding's EBITDA in the fourth quarter between $70 million and $80 million. Full year Siding sales growth is about 17% to $1.55 billion, and EBITDA is in the $390 million to $400 million range. - OSB fourth quarter EBITDA is expected to be in the $15 million to $25 million range. Full year 2024 EBITDA is believed to be between $655 million and $675 million, an increase of about $65 million from August's guidance. CapEx for 2024 is around $200 million, and 2025 CapEx is expected to be between $350 million and $375 million, including $100 million to $125 million for the next Siding mill.

• Macro-economic factors such as interest rates and affordability are dominant. - Potential trade tariff impacts on panel imports, including uncertainties related to Canadian panel imports and their impact on OSB pricing. - Housing market dynamics and related uncertainties affecting business performance.

Q: Susan Maklari asked about CapEx and Siding capacity additions.

A: Brad Southern stated they are planning the next significant Siding capacity expansion starting next year, depending on Siding growth.

Q: Michael Roxland asked about SmartSide share gain and competitive response.

A: Brad Southern said the competitive situation is normal, and the value proposition of the product is key to winning business.

Q: Sean Steuart asked about Wawa mill and tariff impact.

A: Brad Southern discussed Siding expansion options and the transparency regarding tariffs on panel imports.

Q: Steven Ramsey asked about BuilderSeries and OSB structural shipments.

A: Brad Southern mentioned BuilderSeries growth and LP's focus on growing Structural Solutions as a percentage of the portfolio.

Q: Matthew McKellar asked about Q4 Siding revenue and South America investment.

A: Alan Haughie explained the seasonality impact on Q4 Siding revenue, and Brad Southern talked about the South America strategy for modular housing.

Q: Mark Weintraub asked about Siding expansion drivers and OSB.

A: Brad Southern discussed distribution growth and OSB strategy focusing on Structural Solutions.

Q: Ketan Mamtora asked about Siding expansion factors and activity.

A: Brad Southern talked about product categories and the solid order activity in Siding.

Q: Kurt Yinger asked about Siding EBITDA and maintenance impact.

A: Alan Haughie explained the onetime maintenance and project impact on Q3 to Q4 Siding EBITDA