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Core Viewpoint - Louisiana-Pacific reported mixed Q3 2025 results, with adjusted earnings missing estimates while net sales exceeded expectations, indicating challenges in the OSB segment [2][3]. Earnings and Revenue Overview - Adjusted EPS was 36 cents, missing the Zacks Consensus Estimate of 37 cents by 2.7% and down 70% year over year from $1.22 [3]. - Consolidated net sales reached $663 million, surpassing the consensus mark of $656 million by 1.1%, but down 8.2% from $722 million a year ago, primarily due to lower OSB prices [3]. Segment Performance - Siding segment sales grew 5% year over year to $443 million, with adjusted EBITDA slightly declining to $117 million and a margin of 26% [4]. - OSB segment sales fell 29% to $179 million, resulting in an adjusted EBITDA loss of $27 million compared to a $33 million profit last year [4]. - LP South America reported sales of $39 million, down 17% year over year, with adjusted EBITDA halving to $5 million [4]. Margins and Profitability Metrics - Gross profit decreased 33% year over year to $129 million, with gross margin contracting by 440 basis points to 19.4% [5]. - Adjusted EBITDA fell to $82 million, down 46% from $153 million last year, with an adjusted EBITDA margin of 12.4% compared to 21.2% a year ago [5]. - Adjusted operating profit sharply declined to $18 million, representing an adjusted operating margin of 2.7% versus 16.1% in the prior-year period [5]. Balance Sheet & Shareholder Returns - As of September 30, 2025, LP had cash and cash equivalents of $316 million and total liquidity of $1.1 billion, with long-term debt at $348 million [6]. - The company invested $84 million in capital expenditures and paid $19 million in dividends, with no share repurchases during the quarter [6]. Q4 & 2025 Outlook - For Q4 2025, LP anticipates Siding net sales of nearly $370 million (up 3%) and adjusted EBITDA of approximately $82 million (22% margin) [7]. - For the full year 2025, guidance includes Siding adjusted EBITDA of about $430 million (26% margin) and consolidated adjusted EBITDA of nearly $420 million [8]. Estimate Trends - Recent estimates have shown a downward trend, with the consensus estimate shifting down by 61.29% [9]. VGM Scores - Louisiana-Pacific has a Growth Score of B but lags in Momentum with a D and Value with a D, resulting in an aggregate VGM Score of C [10]. Industry Performance - Louisiana-Pacific is part of the Zacks Building Products - Wood industry, where Boise Cascade has gained 5% over the past month, despite reporting a year-over-year revenue decline of 2.7% [12].

Core Viewpoint - BMO Capital has lowered the price target for Louisiana-Pacific Corporation (LPX) to $98 from $108 while maintaining a Market Perform rating, citing attractive valuation due to recent stock pullback and strong performance in Siding products, particularly the higher-priced ExpertFinish line [1]. Financial Performance - For Q3 2025, Louisiana-Pacific reported revenue of $663 million, a decrease of over 8% compared to the same quarter last year [2]. - Siding revenue increased by $22 million, or 5%, primarily driven by a 5% rise in selling prices [2]. - Within the Siding segment, ExpertFinish net sales grew by 31% for the quarter and 24% for the nine months ending September 30, 2025, compared to the prior-year periods [2]. Strategic Focus - Louisiana-Pacific is focused on expanding its value-added product lines, especially in Siding, with long-term growth reliant on product innovation, operational efficiency, and market demand adaptation [3]. - The company emphasizes overall equipment effectiveness (OEE) and is targeting international expansion, particularly in South America [3]. Product Offerings - Louisiana-Pacific manufactures engineered wood products for residential, commercial, and industrial construction, with main offerings including Siding and OSB, serving both new home construction and remodeling markets [4].

Group 1 - Louisiana-Pacific (LPX) is the largest manufacturer of engineered wood siding in North America, specifically known for lap siding, which is an exterior building material consisting of overlapping boards [1] - The forest industry is being researched, indicating a focus on the potential growth and investment opportunities within this sector [1] Group 2 - The analyst has extensive experience in investment research, having worked in various roles across different investment firms, which adds credibility to the analysis of the forest industry [1] - The analyst's personal journey reflects a deep connection with nature, which may influence their perspective on sustainable practices within the forest industry [1]

Group 1 - Louisiana-Pacific (LPX) is the largest manufacturer of engineered wood siding in North America, specifically known for lap siding, which is an exterior building material consisting of overlapping boards [1] - The company operates in the forest industry, which is currently under research for potential investment opportunities [1] Group 2 - The analyst has extensive experience in investment research, having worked in various roles across different investment firms, including sell-side research, hedge funds, and wealth management [1] - The analyst's journey includes obtaining CFA and CAIA designations by the age of 25, highlighting a commitment to professional development in the finance sector [1]

Housing Market Trends - Single-family housing starts decreased by approximately 4% and 5% for the three and nine months ended September 30, 2025, compared to the same periods in 2024, while multi-family housing starts increased by approximately 24% and 20% respectively [82]. - Total housing starts for the three months ended September 30, 2025, were 365,000, compared to 353,000 for the same period in 2024, indicating an increase of approximately 3.4% [95]. Financial Performance - Adjusted EBITDA for the three months ended September 30, 2025, was $82 million, compared to $153 million for the same period in 2024, reflecting a decrease of approximately 46.4% [91]. - Adjusted Diluted EPS for the three months ended September 30, 2025, was $0.36, down from $1.22 in the same period of 2024, representing a decline of approximately 70.5% [91]. - The Siding segment's Adjusted EBITDA for the three months ended September 30, 2025, was $117 million, slightly down from $123 million in the same period of 2024 [91]. - The OSB segment reported an Adjusted EBITDA of $(27) million for the three months ended September 30, 2025, compared to $33 million in the same period of 2024, indicating a significant decline [91]. - For the three months ended September 30, 2025, total sales volume increased to 496 MMSF from 470 MMSF in the same period of 2024, reflecting a growth of 5.5% [96]. - The Siding segment net sales for the three months ended September 30, 2025, were $443 million, a 5% increase from $420 million in 2024, while Adjusted EBITDA decreased by 4% to $117 million [100]. - OSB segment net sales for the three months ended September 30, 2025, were $253 million, a decrease of 29% from $179 million in 2024, with Adjusted EBITDA dropping by 182% to $(27) million [101]. - LPSA segment net sales for the three months ended September 30, 2025, were $47 million, down 17% from $39 million in 2024, with Adjusted EBITDA decreasing by 50% to $5 million [105]. Cost and Expense Management - In the nine months ended September 30, 2025, the cost of sales in the Siding segment was negatively impacted by $7 million due to new or increased tariffs, with potential incremental costs estimated at approximately $8 million for 2025 [84]. - Selling, general, and administrative expenses increased to $95 million for the three months ended September 30, 2025, compared to $75 million in 2024, primarily due to higher employee compensation [108]. - The company has experienced increases in material prices and supply disruptions, which are being addressed to meet market demands [83]. - The company is actively exploring opportunities to mitigate increased costs from tariffs and trade policy changes, but the effectiveness of these strategies remains uncertain [84]. Cash Flow and Investments - Cash provided by operations for the nine months ended September 30, 2025, was $315 million, down from $500 million in 2024, attributed to lower net income and changes in working capital [114]. - Cash used in investing activities increased to $216 million for the nine months ended September 30, 2025, compared to $122 million in 2024, mainly due to higher spending on growth and maintenance projects [115]. - Capital expenditures in 2025 are expected to be approximately $315 million, funded through cash on hand, cash generated from operations, and available borrowing [116]. - Cash used in financing activities for the nine months ended September 30, 2025, was $124 million, including $61 million for share repurchases and $58 million in cash dividends [117]. - For the nine months ended September 30, 2024, cash used in financing activities was $252 million, with $188 million allocated for share repurchases and $56 million for dividends [118]. Credit and Borrowing - The Amended Credit Agreement increased the credit facility from $550 million to $750 million and extended the maturity date to March 26, 2032 [119]. - As of September 30, 2025, there were no outstanding borrowings under the Amended Credit Facility, and the company was in compliance with all financial covenants [120]. - As of September 30, 2025, the company had no outstanding borrowings under its Amended Credit Facility and no derivative or hedging arrangements for interest rate changes [131]. Impairment Charges - The company recorded $13 million in non-cash, pre-tax impairment charges during Q3 2025 related to equipment not utilized in future operations [125]. - In Q2 2025, the company recorded $17 million in non-cash, pre-tax impairment charges, including $11 million for acquired equipment not utilized [126]. Foreign Currency Exposure - The company is exposed to fluctuations in foreign currency exchange rates, particularly with the Canadian dollar, Brazilian real, Chilean peso, and Argentine peso [129]. Production and Efficiency - The overall equipment efficiency (OEE) for the Siding segment remained stable at 77% for both 2025 and 2024, while OSB improved to 80% from 78% in 2024 [97]. - The most significant commodity product sold is OSB, with no material changes to production capacity and price sensitivity disclosed [130].

Financial Data and Key Metrics Changes - Total sales in the quarter were down 8% compared to the prior year, with EBITDA of $82 million also down significantly, primarily due to the extended trough in OSB prices [5][6] - The company achieved $89 million of operating cash flow after $82 million of EBITDA, with $316 million in cash and over a billion dollars of liquidity [14][16] - Full-year total company EBITDA guidance has risen by $20 million from $405 million to $425 million [16] Business Line Data and Key Metrics Changes - Siding volume in the third quarter was flat, but Siding sales revenue grew by 5%, driven primarily by price and a strong mix [4][10] - ExpertFinish pre-finished Siding product saw sales volumes increase by 17% year over year, accounting for 10% of overall Siding volume and 17% of overall Siding revenue [5][10] - OSB business achieved 80% overall equipment effectiveness (OEE), up two points from last year, despite challenging market conditions [6][13] Market Data and Key Metrics Changes - OSB prices remained low, barely above variable costs, driven by sluggish demand, particularly in the Southeast [13][15] - The South American business is struggling with a sluggish economy, impacting overall corporate overhead [16] Company Strategy and Development Direction - The company is exploring the conversion of its OSB mill in Maniwaki, Quebec, to Siding production, which could provide additional capacity in advance of market demand [17] - The integration of OSB and Siding businesses aims to leverage resources and improve market positioning [43] - The company is focused on managing costs and optimizing its network relative to current demand [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing share gains despite a softening market, particularly in the Siding segment [4][10] - The outlook for OSB remains challenging, with expectations of a $45 million EBITDA loss in the fourth quarter [15] - Management emphasized the importance of maintaining a strong culture and effective operations in navigating market challenges [6][8] Other Important Information - The company was named one of the 50 best manufacturers in the U.S. and one of America's most admired workplaces [6][7] - The CEO announced plans to retire in February after over 25 years of service, with confidence in the incoming president's leadership [8][9] Q&A Session Summary Question: Details on the potential shift from Holton to Maniwaki - Management discussed the various options for mill conversion, emphasizing the scale and cost position of Maniwaki as a viable candidate [20][24] Question: Competitive dynamics in the Siding business - Management noted that they have not seen significant disruption in the channel and are focused on their strategy to gain market share [25] Question: Pricing environment for Siding in 2026 - A price increase was announced, targeting a net increase of 3%-4% in 2026, with a focus on managing order intake to minimize inventory build [31][32] Question: Balancing capacity in the OSB market - Management indicated that OSB demand has been soft, with a focus on matching capacity to demand and optimizing costs [34] Question: Volume growth by end market in Q3 - Shed volumes were up year-over-year, while new construction segments faced challenges, particularly in southern markets [40][100] Question: ExpertFinish margins and managed order file - Margins for ExpertFinish are improving, with expectations for continued growth as capacity increases [86][91] Question: Market share gains in ExpertFinish - Management expressed confidence in the sustainability of market share gains, focusing on securing shelf space and contractor relationships [92][93]

Financial Performance - Q3 2025 vs Q3 2024 - Net sales decreased by 8% to $663 million[12] - Adjusted EBITDA decreased to $82 million from $153 million[12] - Adjusted EPS decreased to $036 from $122[12] Siding Segment - Q3 2025 vs Q3 2024 - Siding sales increased by 5%[12] - Siding net sales increased from $420 million to $443 million[19] - Siding adjusted EBITDA decreased from $123 million to $117 million[19] OSB Segment - Q3 2025 vs Q3 2024 - OSB adjusted EBITDA decreased from $33 million to $(27) million[23] - OSB net sales decreased from $253 million to $179 million[23] Liquidity and Capital Allocation - Total liquidity stands at $11 billion[13] - Return to shareholders was $19 million[12] 2025 Guidance - Siding revenue is expected to be approximately $370 million for Q4, representing approximately 3% growth[27] - Siding adjusted EBITDA is expected to be approximately $82 million for Q4, with a margin of approximately 22%[27] - OSB adjusted EBITDA is expected to be approximately $(45) million for Q4[27] - Total LP adjusted EBITDA is expected to be approximately $32 million for Q4[27]

Core Insights - Louisiana-Pacific (LPX) reported quarterly earnings of $0.36 per share, missing the Zacks Consensus Estimate of $0.37 per share, and down from $1.22 per share a year ago, representing an earnings surprise of -2.70% [1] - The company posted revenues of $663 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.09%, but down from $722 million year-over-year [2] - Louisiana-Pacific shares have declined approximately 17.6% year-to-date, contrasting with the S&P 500's gain of 15.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $639.6 million, and for the current fiscal year, it is $2.84 on revenues of $2.77 billion [7] - The estimate revisions trend for Louisiana-Pacific was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Building Products - Wood industry, to which Louisiana-Pacific belongs, is currently ranked in the bottom 5% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Performance - Consolidated net sales for Q3 2025 decreased by $59 million (8%) to $663 million compared to Q3 2024[7]. - Net income for Q3 2025 was $9 million, a decrease of $82 million from the prior year, resulting in a diluted EPS of $0.13[8]. - Adjusted EBITDA for Q3 2025 was $82 million, a decrease of $71 million year-over-year, reflecting lower OSB prices and increased costs[6][8]. - Net sales for Q3 2025 were $663 million, a decrease of 8.2% from $722 million in Q3 2024[25]. - Gross profit for Q3 2025 was $129 million, down 33.2% from $193 million in Q3 2024[25]. - Net income for Q3 2025 was $9 million, a significant decline of 90% compared to $90 million in Q3 2024[25]. - Adjusted EBITDA for Q3 2025 was $82 million, a decrease of 46.4% from $153 million in Q3 2024[35]. - Adjusted diluted EPS for Q3 2025 was $0.36, down from $1.22 in Q3 2024[35]. Sales and Revenue - Siding net sales increased by $22 million (5%) to $443 million in Q3 2025, while OSB net sales decreased by $74 million (29%) to $179 million[6]. - For the first nine months of 2025, net sales decreased by $119 million (5.4%) to $2.1 billion, with Siding revenue increasing by $108 million (9%) and OSB revenue decreasing by $221 million[9][10]. - The company expects fourth quarter Siding net sales to be approximately $370 million (~3% growth) and full-year Siding net sales to reach ~$1.68 billion (~8% growth)[4]. - Total sales for Q3 2025 were $663 million, down 8.2% from $722 million in Q3 2024[34]. - Sales volume for Siding Solutions in Q3 2025 was 496 million square feet (MMSF), up from 470 MMSF in Q3 2024[31]. Expenses and Costs - Selling, general, and administrative expenses increased to $95 million in Q3 2025, compared to $75 million in Q3 2024[25]. - The Siding segment's Adjusted EBITDA decreased by $6 million (5%) in Q3 2025, while it increased by $30 million (9%) for the first nine months[12]. - OSB segment Adjusted EBITDA for Q3 2025 was $(27) million, a significant decrease of 182% year-over-year, driven by lower prices and sales volume[13][14]. Assets and Equity - Total assets increased to $2,649 million as of September 30, 2025, compared to $2,569 million at the end of 2024[26]. - Stockholders' equity rose to $1,739 million as of September 30, 2025, up from $1,671 million at the end of 2024[26]. Cash Flow and Investments - Cash provided by operating activities for the nine months ended September 30, 2025, was $315 million, down from $500 million in the same period of 2024[27]. - Cash used in investing activities for Q3 2025 was $83 million, compared to $61 million in Q3 2024[27]. - The company repurchased common stock worth $61 million in the nine months ended September 30, 2025[27]. - Capital expenditures for 2025 are projected to be approximately $315 million, with $125 million allocated for strategic growth and $190 million for sustaining maintenance[5]. Market Conditions - Housing starts in the U.S. for Q3 2025 were 364,000, a 3.1% increase from 353,000 in Q3 2024[30]. - The company has not provided specific forward-looking guidance in this release[22]. Impairments and Other - The company reported a loss on impairment of $13 million in Q3 2025, compared to no impairment in Q3 2024[25]. - Total liquidity as of September 30, 2025, was $1.1 billion, providing a strong financial position for future investments[6]. - The average diluted shares outstanding were 70 million for Q3 2025, consistent with Q3 2024[25]. - Adjusted EBITDA is not provided in the financial statements but is considered an important supplemental measure of performance[23].