Louisiana-Pacific(US:LPX)2025-11-05 19:45Housing 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].