Louisiana-Pacific(LPX) - 2024 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section provides detailed financial statements, management's analysis of operations, market risk disclosures, and an assessment of internal controls Item 1. Financial Statements This section presents the company's condensed consolidated financial statements, including statements of income, balance sheets, and cash flows, along with accompanying notes Condensed Consolidated Statements of Income The company reported significant year-over-year increases in net sales and a turnaround to net income for both the second quarter and first half of 2024 Q2 & H1 2024 Financial Performance (in millions, except EPS) | Metric | Q2 2024 | Q2 2023 | YoY Change | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $814 | $611 | +33.2% | $1,539 | $1,195 | +28.8% | | Gross Profit | $263 | $119 | +121.0% | $477 | $220 | +116.8% | | Income from Operations | $194 | $8 | +2325.0% | $339 | $37 | +816.2% | | Net Income (Loss) | $160 | $(21) | N/A | $267 | $1 | +26600.0% | | Diluted EPS | $2.23 | $(0.28) | N/A | $3.71 | $0.02 | +18450.0% | Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2024, shows increased total assets and stockholders' equity, with stable total liabilities Balance Sheet Summary (in millions) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $883 | $778 | | Cash and cash equivalents | $317 | $222 | | Total Assets | $2,529 | $2,437 | | Total Current Liabilities | $261 | $259 | | Long-term debt | $347 | $347 | | Total Liabilities | $871 | $880 | | Total Stockholders' Equity | $1,658 | $1,557 | Condensed Consolidated Statements of Cash Flows Cash flow from operations significantly improved in the first half of 2024, while investing activities decreased and financing activities focused on share repurchases and dividends Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $317 | $(30) | | Net cash used in investing activities | $(61) | $(271) | | Property, plant, and equipment additions | $(77) | $(188) | | Net cash used in financing activities | $(157) | $(14) | | Repurchase of common stock | $(115) | $0 | | Payment of cash dividends | $(37) | $(35) | | Net increase (decrease) in cash | $95 | $(313) | Notes to the Condensed Consolidated Financial Statements The notes provide detailed segment performance, revenue recognition policies, and information on subsequent share repurchases Net Sales by Segment (in millions) | Segment | Q2 2024 | Q2 2023 | YoY Change | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Siding | $415 | $320 | +29.7% | $776 | $651 | +19.2% | | OSB | $351 | $229 | +53.3% | $664 | $418 | +58.9% | | LPSA | $46 | $53 | -13.2% | $93 | $108 | -13.9% | | Total Sales | $814 | $611 | +33.2% | $1,539 | $1,195 | +28.8% | Adjusted EBITDA by Segment (in millions) | Segment | Q2 2024 | Q2 2023 | YoY Change | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Siding | $105 | $59 | +78.0% | $195 | $126 | +54.8% | | OSB | $125 | $37 | +237.8% | $215 | $42 | +411.9% | | LPSA | $10 | $13 | -23.1% | $20 | $24 | -16.7% | | Total Adjusted EBITDA | $229 | $93 | +146.2% | $411 | $159 | +158.5% | - Subsequent to June 30, 2024, through August 6, 2024, the company repurchased 0.7 million shares of its common stock for $64 million under its existing share repurchase program[55] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, liquidity, and capital resources, highlighting key drivers and segment-specific results Demand for Building Products and Key Performance Indicators This section analyzes the impact of housing starts on product demand and presents key operational performance indicators U.S. Housing Starts (in thousands) | Category | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Single-Family | 281 | 261 | 522 | 449 | | Multi-Family | 92 | 139 | 172 | 266 | | Total | 373 | 400 | 693 | 715 | Sales Volume (MMSF) | Product Line | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Siding Solutions | 465 | 384 | 876 | 779 | | OSB - Structural Solutions | 588 | 540 | 1,161 | 993 | | OSB - commodity | 415 | 354 | 830 | 736 | Results of Operations by Segment Detailed analysis of net sales and Adjusted EBITDA performance for the Siding, OSB, and LPSA segments, highlighting key drivers for each - Siding: Q2 2024 net sales increased 30% YoY, driven by a 22% increase in unit shipments and a 6% increase in average net selling price[75]. Adjusted EBITDA grew 78% to $105 million[77] - OSB: Q2 2024 net sales increased 53% YoY, reflecting a $73 million increase from higher selling prices and a $40 million increase from higher sales volumes[79]. Adjusted EBITDA grew 239% to $125 million[81] - LPSA: Q2 2024 net sales and Adjusted EBITDA decreased by 12% and 17% respectively, reflecting unfavorable currency fluctuations and lower prices, partially offset by higher OSB unit shipments[82][85] Liquidity and Capital Resources The company's liquidity improved significantly in H1 2024, driven by strong operating cash flow and reduced capital expenditures, while returning capital to shareholders - Principal sources of liquidity are cash on hand, cash from operations, and a $550 million revolving credit facility, which had no outstanding borrowings as of June 30, 2024[90][93] - Cash used in financing activities in H1 2024 was $157 million, primarily consisting of $115 million for share repurchases and $37 million for dividends[91] - Capital expenditures for H1 2024 were $77 million, a significant decrease from $188 million in H1 2023, which included higher siding conversion expenditures[90] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company identifies its primary market risks as foreign currency fluctuations, commodity price volatility, and interest rate changes - The company faces foreign currency exposure, primarily related to the U.S. dollar versus the Canadian dollar, Brazilian real, Chilean peso, and Argentine peso[96] - OSB is the company's most significant commodity product, with sales prices fluctuating based on market factors beyond its control[97] - Interest rate risk exists due to the variable rate on the Amended Credit Facility, though there were no outstanding borrowings as of June 30, 2024[98] Item 4. Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective[100] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2024[101] PART II - OTHER INFORMATION This section addresses updates to risk factors and details the company's unregistered sales of equity securities and use of proceeds Item 1A. Risk Factors The company reports no material changes to the risk factors previously disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K[104] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during Q2 2024 and the remaining authorization under its share repurchase programs Share Repurchases for Q2 2024 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2024 | 386,591 | $77.41 | | May 2024 | 271,014 | $84.52 | | June 2024 | 548,019 | $89.25 | | Total Q2 2024 | 1,205,624 | $84.41 | - As of June 30, 2024, the company had an aggregate of $335 million of repurchase authorization remaining under its share repurchase programs[106][107]