Louisiana-Pacific Corporation Q4 FY2025 earnings call

• Congratulated Brad Southern on retirement and expressed confidence in LP's strategy and team.
• Noted 2025 was a difficult year for homebuilding with housing starts decelerating.
• Siding grew 8% full year, expanded margins especially in Expert Finish.
• OSB mills operated safely and efficiently, managed costs and capacity.
• Integration of LP under Chief Commercial Officer and Chief Operating Officer structure showed value, like aligning go - to - market strategies and improving operating efficiency.
• LP achieved a total incident rate of 0.62 in 2025 and earned APA's Safest Company Award for the third year running.

Siding: Full year saw 8% revenue growth, with 4% higher net selling prices and 4% higher sales volumes, resulting in $567,000,000 net sales in Q4, $50,000,000 EBITDA in Q4, and $0.03 adjusted diluted earnings per share in Q4. EBITDA margin was 26% for the full year. OSB: Fourth quarter had unfavorable supply - demand dynamics leading to multiyear price lows and volume reductions, but achieved $7,000,000 EBITDA for the year.

• OSB guidance: Random Lengths prices near OSB breakeven, extrapolating current prices OSB results similar to 2025; Q1 2026 OSB EBITDA expected to be a loss of $25,000,000 to $30,000,000.
• Siding 2026: Q1 expected total volumes down 15% - 20%, shed volumes down 25% - 30%, new residential construction and R&R volumes down 10% - 15%, average selling prices up 6 - 8 points, net sales down 11% - 13%, EBITDA margin 23% - 25% in Q1; by year - end, volumes down low single digits, selling prices up mid - single digits, net sales up low single digits, EBITDA margin around 25% - 26%.
• Capital expenditures: Anticipate investing about $400,000,000 split equally between sustaining maintenance and strategic growth, back - end loaded.

• Market uncertainty led to dealers being more cautious with inventory positions, combined with volume allocation prior to price increase resulted in elevated channel inventories.
• OSB prices are not controllable by LP, which is a risk factor.

Q: Hi. Good morning. I have Anika Dallacia on for Matt today. First off, Brad, congrats, and, Jason, look forward to working with you. First, with 1Q Siding revenue guidance, it implies a step up through the rest of the year to get to $1,700,000,000 guidance, maybe somewhere in the mid - single - digit range. I know you talked about shed normalizing. Is that the main driver you are looking at in the year - over - year comps, or any details around how you are thinking about the cadence of revenues?

A: Yeah. Hi. It is—We are expecting some improvement in shed. That is probably the dominant piece, but really, we are expecting improvement across the board as housing normalizes.

Q: I am curious on the affordability pressure today. Are you seeing any risk of mix down to vinyl or other siding materials that have a lower upfront cost? What are you hearing from contractors, and are there any differences by channel, either builder or R&R?

A: Thanks for the question. I would say affordability remains a primary headwind and all the builder customers that we are working with are focused on meeting a price point that will allow them to turn more homes. There has been a little bit of a move to vinyl, but we think with the broad product offering that we offer with SmartSide that there is tremendous value there, and with a relatively low share position there are plenty of opportunities for us to continue on our growth trajectory.

Q: Coming back to Siding, Jason, can you talk a little bit about what you are seeing in terms of demand in your Expert Finish product? I saw volumes were pretty good in Q4. Are you still in allocation on that business? Any trends you can talk to?

A: Thanks, Ketan. Appreciate the question. In regards to Expert Finish, what I would say is macro trends remain in our favor here. Labor is tight. Labor is expensive. Homeowners expect a durable and resilient solution that comes with a warranty. Our value proposition for Expert Finish and Expert Finish Naturals really addresses all of those needs. As a result, we are continuing to see this product category outperform in both new construction and repair and remodel. In regards to the allocation question, we did come off allocation, I believe, February 1, so a couple of weeks ago. That is due to the OEE improvements that we were able to realize across our network. We thought that we would have to wait until our new Green Bay facility came online in early Q2 of this year, but through great work from our operations folks, we have been able to come off slightly in advance of what we had planned on.

Q: Can you remind us how you are thinking about additional capacity in Siding? Last quarter, you talked about it as being one of the options. How should we think about timeline on that? In the meantime, how are you thinking about managing production in OSB?

A: I will start with Siding and say we are very excited to be ramping up our new 70,000,000 - foot line in Green Bay in early Q2. Regarding broader capacity expansion opportunities, we are continuing detailed engineering work for future Expert Finish and Primed capacity expansion projects. Some of that capital spend is in the figures that Alan shared earlier, a little more back - end loaded. Big picture, we want to be prepared to execute with projects that are essentially ready for plug and play when the timing is appropriate, with a heavy bent towards being early versus late. Second question, Ketan, I believe, was around how we are managing OSB capacity. I would say largely consistent with what we have done in prior years, very focused on managing capacity to demand. We are pleased to see the nice rebound in prices to begin the year and have been able to keep a healthy order file across our network. It feels more optimistic that supply and demand are a little more in balance than they had been for the majority of last year.

Q: could you speak to more of the broad competitive environment that you are seeing in Siding right now?

A: What I would say, Brad, is broadly we are very confident that we are gaining share in all of the segments that we focus on. I think there is strong evidence of that if you look back at the last couple of years, with 2025 supporting that as well. Right now, with starts ticking up in the back half of 2025, it comes with its challenges. But we feel like in the new construction and repair and remodel segments, in particular, we have a relatively low share position and a very large field sales organization that is focused on winning new customers. That does not stop in a softer market, and we believe there are plenty of opportunities in front of us.

Q: As you bring Expert Finish capacity online, can you speak to how you will have to ramp your marketing spend and investments, both in terms of the timeline and the magnitude, maybe compared to the $11,000,000 investment that you saw in 2025?

A: Over the last several years, you have seen an increase in both marketing spend and the addition of field sales resources to support the growth of Expert Finish. We did not put any of that on pause as we experienced allocation back in September or October. Those investments will continue going forward. We are very pleased with the growth we are seeing in Expert Finish and excited to bring on one of our newest state - of - the - art lines in Green Bay, Wisconsin.

Q: Last year, you mentioned sheds up a little better than 20% by your best guess estimate, obviously slowed in the first quarter. What are you embedding for sheds for the full year in 2026 versus 2025? To the extent that you have information, where would you say your shed business was last year relative to, say, the last ten years, or another appropriate time frame?

A: I will start with the first part of the question. In regards to shed, there has always been a bit of lumpiness to our order intake. Although inventories are higher than we anticipated, we are hearing anecdotally from several of our largest shed fabricators that underlying demand in this segment remains on a firm footing and trending very similarly to 2025 levels. This positive news, coupled with some new product innovations—specifically our Everyday Flooring series and SilverTech roofing that we launched to begin the year—gives us confidence we can get back to a normal trajectory quickly once inventories are depleted throughout the first quarter.

Q: I am just—Because you were up 20% last year, was that getting you to what you consider to be normalized, or was that substantially better than what you consider normalized?

A: Last year was a bit of an anomaly because our shed distributors came into 2025 with inventories very lean. We had an inventory build throughout Q1 and Q2, and then, obviously, overshot the allocation prior to the 2026 price increase. We feel like the underlying demand is very stable in shed, and with new products we brought to market, we feel like there is growth opportunity in that segment even though we own a relatively high share position.

Q: I wanted to start with higher Siding EBITDA in the guidance and then breakeven OSB. Does that point to operating cash flow being somewhat near the 2025 results, and if so, CapEx points to free cash flow being roughly breakeven? Maybe you can talk to the assumptions there on free cash generation.

A: That is about right. Yes. You nailed it.

Q: Is there an expected pace on the Siding margin ramp through the year? The last year or two, Q1 and Q2 EBITDA margin were in the same zone. Is it expected to be a steeper ramp upward going through 2026?

A: I would think of it as more seasonal. We had very strong Q1 and Q2s last year; hence the seasonality was tilted towards that first half. The seasonality of the volume—volume provides such huge leverage that the cadence of the EBITDA margin, while being on a modest rising curve, will follow the seasonality of volume. That is really the factor that most influences it, the leverage we get from the volume.

Q: Can you comment what kind of Siding volume pull - through you are seeing from your homebuilder channel right now? Please provide broader commentary about how any specific homebuilder relationships might be evolving.

A: Speaking to the homebuilder community, it is very different depending on region. There is certainly more strength in the northern markets where historically Siding has been strongest and softer in the Southeast, Texas, and some Western markets. It depends on geography. In terms of where we are with our relationships, I mentioned earlier the integration of LP. We are focused on leveraging our full portfolio of solutions to drive growth in the homebuilder segment. We know we are a very relevant supplier to this market, and that strategy is allowing us to offer greater value and be more creative and responsive to our customers' needs. We are still in the early stages, but we are encouraged by the reception we have received from builders in response to the integration of LP.

Q: I want to make sure I did not mishear earlier. Did you say that the inventory buildup in the channel right now, you expect that to unwind over the course of Q1, bringing us back to a more normalized steady state in Q2?

A: I will shed a little bit of light on that. We believe the dealer channel, those closest to the builder, did not necessarily increase inventories throughout the fall; they are focused more on working capital. However, our two - step customers, the folks we transact with most, took advantage of the allocation in advance of the price increase. We see that in their inventory reporting requirements looking backwards. Based on what we see—roughly two to four weeks of inventory at the two - step level—we believe that can be consumed heading into Q2 with the historical uplift in seasonal demand. So yes.

Q: Last one for me, on OSB, the segment EBITDA margins of negative 29%—is that largely attributable to the low mill operating rates in Q4, which presumably would have had a significant impact on your overall mill cost structure? Or are there any lumpy items in there? In particular, any one - time inventory write - downs?

A: The only inventory write - down that occurs is a mark - to - market on inventory that we carry on the books because the selling price is at times lower than the standard carrying cost. Nothing exceptional or out of the ordinary, or that has not occurred at various points over the last 20 years.

Q: We did have a couple of reasonably large maintenance projects in the quarter that added a bit of expense, but it was mostly utilization rates and price that drove it.

Q: My first question is staying on OSB. Can you talk a bit about how you are thinking of the outlook for demand? The builders have largely talked about their starts this year being up low single digits. What does that imply in terms of the potential ramp for OSB? Then can you talk about your approach to capacity relative to that?

A: Thanks, Susan. Appreciate the question. Our focus is on matching our supply with customer demand. As mentioned earlier, we have seen a nice rebound to begin the year, but we feel like it is a supply - driven rebound. A couple of our competitors announced mill closures in Canada. There have also been some maintenance outages and some unscheduled downtime associated with the winter storm that is playing into the favorable pricing environment. Looking forward, we will need an improvement in demand to stay in balance as we head into Q2 and Q3. I am optimistic that will carry through as we head into the building season.

Q: Turning to the margin in the Siding segment, can you talk about what you are seeing in terms of input costs and freight? How should we think about any startup costs associated with Green Bay and how that will flow through as well?

A: In our guidance for the full - year Siding EBITDA margin, we have included some significant inflation. It is about $20,000,000 of raw material inflation, which is on our resin and paper overlay, largely contractual. So, $20,000,000 of raw materials plus $7,000,000 of labor and then some modest freight inflation. That inflation is baked into the full - year margin. We will see some of that already baked in in Q1. Was the other part of the question ramp - up costs for Green Bay? Nothing significant.

Q: Jason, you referenced the portfolio solutions approach. I was hoping you could talk about a couple of examples of how you are marketing that with the Siding business and the value - add component of that go - to - market strategy.

A: I will touch on that. The approach is to leverage our entire portfolio to drive growth for LP, and specifically our Siding business. The focus primarily is on the new construction segment to start with, but we also see opportunities within the shed segment and repair and remodel segment as well. We are in the early stages. We have a couple of builder wins that came as a result of this focus, and there are a few more on the horizon that I am not prepared to speak to today. I believe within the next quarter we will be able to highlight material wins that were a result of an enterprise approach to the segments we play in.

Q: In terms of the outlook, it sounds like at least in Q1, R&R versus the new residential pieces within Siding are performing similarly. Is that how you expect the whole shape of the year, or would you think that R&R could perhaps be a little more stable, notwithstanding the weather here in the first month and a half? Can you talk a bit about that, please? Thank you.

A: I feel like the repair and remodel segment is the most stable for us right now, followed by shed. Shed is a challenge for us in Q1 as we work through the channel inventory situation. We need to see a rebound in the new construction segment right now. It is softer than it was this time last year, and we are planning for an improvement throughout 2026.