Investment Thesis - Louisiana-Pacific Corporation (LPX) is expected to achieve continued growth through capacity expansion, enhanced sales efforts, and marketing initiatives despite macroeconomic challenges [2] - The partnership with Lennar is driving growth in the BuilderSeries product line, which can be replicated with other builders to enhance revenue [2] - A potential recovery in the housing market is anticipated as interest rates begin to reverse, benefiting the company's revenues [2] - The aging housing inventory supports long-term revenue growth in the Repair and Remodel (R&R) market [2] Revenue Analysis and Outlook - In Q2 2024, LPX's sales rose by 33.2% year-over-year to $814 million, driven by volume and price increases in the Siding and OSB segments [3][4] - The Siding segment saw a revenue increase of 29.7% year-over-year, with a 22% volume growth and a 6% increase in unit prices [3] - OSB segment revenues grew by 53.3% year-over-year, attributed to a 34% price increase and improved product mix [4] Margin Analysis and Outlook - LPX's adjusted EBITDA margin expanded by 1290 basis points year-over-year to 28.1% in Q2 2024, supported by price and volume increases [9] - The Siding segment's adjusted EBITDA margin increased by 690 basis points year-over-year to 25.3%, aided by reduced costs in freight, raw materials, and labor [9] - The OSB segment's adjusted EBITDA margin rose by 1950 basis points year-over-year to 35.6%, reflecting higher prices and volumes [10] Valuation and Rating - LPX stock is trading at an EV/EBITDA (TTM) of 9.65x, which is a discount compared to its peer James Hardie Industries (JHX) at 14.16x [13] - The company's engineered wood-based siding offers advantages such as lower price and easier installation, which may lead to a higher valuation multiple in line with JHX [14] - Given the growth prospects and potential for valuation re-rating, LPX stock is rated a buy [14]

Financial Data and Key Metrics Changes - LP's net sales for Q2 2024 reached $814 million, a 33% increase compared to the prior year [5][6] - Adjusted EBITDA more than doubled compared to Q2 2023, with significant improvements in operating cash flow and adjusted earnings per share [6][14] - Capital expenditures (CapEx) were approximately $36 million in the quarter, allowing for a greater proportion of operating cash flow to be returned to shareholders [6][15] Business Line Data and Key Metrics Changes - Siding sales grew by 30% in Q2 2024, driven by a 22% increase in sales volume and a 6% increase in prices [5][11] - OSB prices were 34% higher than last year, contributing to $73 million in additional sales and EBITDA [14] - Siding's EBITDA margin increased by seven points to 25%, while OSB ended the quarter with $351 million in sales and $125 million in EBITDA [13][14] Market Data and Key Metrics Changes - The siding growth continues to exceed the underlying housing market, with expectations for siding revenue growth in Q3 2024 between 16% and 18% [8][17] - The repair and remodeling market is experiencing a mid-single-digit decline compared to last year, but LP's ExpertFinish product is gaining share in this segment [8][9] - The company expects full-year revenue growth for siding in 2024 to be between 14% and 16%, exceeding $1.5 billion [17] Company Strategy and Development Direction - LP aims to continue developing new products and expanding addressable markets, particularly in the new construction and repair and remodel segments [9] - The company is actively planning for the next capacity expansion in siding to stay ahead of demand, with potential engineering work beginning next year [40][41] - LP's sustainability initiatives are highlighted, with most products being carbon negative and a focus on improving operational efficiency [8][9] Management's Comments on Operating Environment and Future Outlook - Management noted that demand for SmartSide continues to outperform a moderately weak repair and remodel market, with a robust siding order file [17][66] - There is cautious optimism regarding the potential for pent-up demand in the repair and remodel segment if economic conditions improve [66] - The company is positioned well for future growth, particularly in the siding business, as it continues to gain market share [67] Other Important Information - LP's total incident rate for safety in Q2 was 0.6, and the company was recognized as the safest in its category by the APA - Engineered Wood Association [7] - The company has a remaining Board authorization of $270 million for share repurchases as of August 6, 2024 [16] Q&A Session Summary Question: What factors influenced the Q2 Siding EBITDA margin? - Management indicated that the ExpertFinish growth was a factor, along with slight changes in labor and pricing mix [20] Question: How is the BuilderSeries rollout progressing? - The company is pleased with growth from the BuilderSeries product line, particularly with partnerships like Lennar, and expects continued success [21][22] Question: What is the outlook for Siding inventory levels? - Management believes current inventory levels are normal and adequate for servicing market conditions [28][29] Question: What are the expectations for Siding margins and capacity expansion? - Management is actively planning for the next capacity expansion and expects to maintain margins around 25% [40][46] Question: How is the company addressing selling and marketing expenses? - Selling and marketing expenses increased by about $5 million year-over-year, with expectations for continued investment to support growth [34][36] Question: What is the current operating rate for OSB? - The operating rate for OSB in Q2 was around 86%, with expectations for a slight decrease in Q3 [38] Question: How is the company positioned for the repair and remodel market? - Management expressed confidence in the company's position, noting that demand is currently dampened but could rebound with improved economic conditions [66][67]

Core Viewpoint - Louisiana-Pacific Corporation (LPX) reported strong second-quarter 2024 results, with earnings and net sales exceeding expectations and showing year-over-year growth [1][4]. Performance Highlights - Adjusted earnings per share (EPS) reached $2.09, surpassing the Zacks Consensus Estimate of $1.86 by 12.4%, and increased 280% from the previous year's figure of 55 cents [4]. - Net sales totaled $814 million, exceeding the consensus estimate of $802 million by 1.5% and growing 33% year-over-year, driven by solid Siding and OSB sales [4]. - Adjusted EBITDA was $229 million, up 146.2% from the prior-year quarter, supported by higher OSB selling prices and reduced inflationary costs [5]. Segment Analysis - **Siding**: Sales increased 30% year-over-year to $415 million, with a 6% rise in average net selling price and a 22% increase in volume. Adjusted EBITDA rose 78% to $105 million [6]. - **OSB**: Sales surged 53% year-over-year to $351 million, driven by a 34% increase in OSB prices and higher shipment volumes. Adjusted EBITDA increased 239% to $125 million [7]. - **LP South America (LPSA)**: Sales decreased 12% to $46 million due to lower average selling prices, with adjusted EBITDA dropping 17% to $10 million [8]. Financial Position - As of June 30, 2024, Louisiana-Pacific had $867 million in liquidity, with cash and cash equivalents at $317 million, up from $222 million at the end of 2023. Long-term debt remained stable at $347 million [9]. - Net cash provided by operations was $317 million, a significant increase from $30 million used in operating activities a year ago [9]. Share Repurchase Activity - During the second quarter, the company repurchased 1.2 million common shares for $102 million, leaving 71 million shares outstanding. An additional $64 million was spent on repurchasing 0.7 million shares after the quarter ended [10]. Future Outlook - For Q3, the company expects Siding Solutions' revenues to grow between 16-18% year-over-year and anticipates consolidated adjusted EBITDA in the range of $105-$125 million [11]. - The 2024 guidance for Siding Solutions' revenues has been revised to a growth range of 14-16%, up from the previous 11-13% [12]. - Consolidated adjusted EBITDA is now projected to be between $580-$620 million, down from the prior estimate of $655-$685 million [13].

Louisiana-Pacific (LPX) came out with quarterly earnings of $2.09 per share, beating the Zacks Consensus Estimate of $1.86 per share. This compares to earnings of $0.55 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 12.37%. A quarter ago, it was expected that this home construction supplier would post earnings of $1.13 per share when it actually produced earnings of $1.53, delivering a surprise of 35.40%. Over the last four ...

Louisiana-Pacific Corporation (LPX) is scheduled to report second-quarter 2024 results on Aug 7, before market open. In the last reported quarter, the company's earnings and revenues beat the Zacks Consensus Estimate by 35.4% and 7%, respectively. Its earnings and revenues increased 350% and 24% from the year-ago quarter's period, respectively. The company's earnings surpassed the consensus mark in three of the trailing four quarters and missed once, with an average of 18.6%. Trend in Estimates The Zacks Co ...

Louisiana-Pacific (LPX) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock. Over the past month, shares of this home construction supplier have returned +18.1%, compared to the Zacks S&P 500 composite's +1.1% change. During this period, the Zacks Building Products - Wood industry, which Louisiana-Pacific falls in, has gained 14%. The key question now is: What could be the stock's f ...

The Building Products - Wood industry is part of the Construction sector. At present, this industry carries a Zacks Industry Rank of 214, placing it within the bottom 16% of over 250 industries. The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Investors should also note any recent changes to analyst ...

Core Viewpoint - Louisiana-Pacific Corporation (LPX) is experiencing growth driven by its focus on the Siding business, strategic transformation initiatives, and efforts to enhance shareholder returns [1][6]. Performance Summary - Shares of LPX increased by 23.7% year-to-date, outperforming the Zacks Building Products – Wood industry's decline of 9.3%, the Zacks Construction sector's growth of 10%, and the S&P 500 Index's rise of 17% [1]. - The trailing 12-month Return on Equity (ROE) stands at 20.9%, surpassing the industry's 15.8%, indicating efficient use of shareholders' funds [2]. Earnings Estimates - The Zacks Consensus Estimate for LPX's second-quarter earnings per share (EPS) has decreased to $1.88 from $2.02, and for 2024, it has dropped to $5.31 from $5.79 over the past week [3]. Growth Drivers - LPX has launched new products such as Brushed Smooth, Trim and Siding, Pebbled Stucco Panels, and Nickel Gap, which are expected to enhance the price mix and support growth in new residential construction and repair/remodel sectors [4]. - The adjusted EBITDA for the first quarter of 2024 rose by 175.8% year-over-year to $182 million [5]. - The company has been increasing its Siding capacity and opening new facilities to meet rising demand and expand into new markets [4]. Shareholder Returns - LPX has consistently improved shareholder returns through share repurchases and dividends, increasing its quarterly cash dividend by 8.3% to 26 cents per share on February 9, 2024 [6]. - The company aims to return at least 50% of cash flow from operations exceeding capital expenditures to shareholders over time [6]. Business Transition - LPX is transitioning from a commodity producer to a more stable cash-generative business by focusing on revenue and EBITDA growth, particularly in the Siding unit, while also reducing costs [18]. - The company is enhancing mill efficiency and optimizing supply chain practices to improve productivity and reduce infrastructure costs [18]. Valuation - LPX's forward 12-month P/E ratio is 16.91X, which is below the industry average of 21.55X, indicating potential undervaluation and attractiveness to investors [21]. Challenges - The company faces risks from fluctuating Oriented Strand Board (OSB) prices, which accounted for 43.2% of sales in the first quarter, potentially impacting top-line growth [8]. - Increasing costs related to marketing investments and new product introductions have pressured performance, with costs of sales rising to $511 million from $483 million year-over-year [23].

Company Performance - Louisiana-Pacific (LPX) closed at $85.66, reflecting a +1.77% increase from the previous day, outperforming the S&P 500's gain of 0.55% [1] - Over the past month, LPX shares have decreased by 10.09%, underperforming the Construction sector's gain of 1.99% and the S&P 500's gain of 4.28% [1] Upcoming Earnings - Louisiana-Pacific is set to announce its earnings on August 7, 2024, with an expected EPS of $2.02, indicating a 267.27% growth compared to the same quarter last year [2] - The consensus estimate for revenue is $814.05 million, representing a 33.23% increase from the prior-year quarter [2] Full Year Estimates - For the full year, analysts expect earnings of $5.79 per share and revenue of $3.02 billion, marking changes of +79.81% and +17.03% respectively from last year [3] Analyst Estimates - Recent modifications to analyst estimates for Louisiana-Pacific indicate changing near-term business trends, with positive alterations suggesting analyst optimism regarding the company's business and profitability [4] Stock Performance and Zacks Rank - Adjustments in estimates are correlated with imminent stock price performance, and Louisiana-Pacific currently holds a Zacks Rank of 2 (Buy) [5][6] - The Zacks Consensus EPS estimate has increased by 0.04% in the past month [6] Valuation Metrics - Louisiana-Pacific is trading at a Forward P/E ratio of 14.54, which is a discount compared to its industry's Forward P/E of 22.45 [7] - The company has a PEG ratio of 10.93, while the average PEG ratio for the Building Products - Wood industry is 3.22 [7] Industry Context - The Building Products - Wood industry, part of the Construction sector, has a Zacks Industry Rank of 195, placing it in the bottom 23% of over 250 industries [8] - Top-rated industries outperform the bottom half by a factor of 2 to 1 [8]

What are the Zacks Style Scores? Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks. Momentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stoc ...