LPX - Earnings call transcript Q4 2017 | Louisiana-Pacific Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2017 Louisiana-Pacific Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to turn the conference over to your host for today Mike Kinney, Director of Investor Relations.

begin. may You

Mike Kinney

me joining our financial for am call to well and today Kinney, Chief Southern, Thank Officer; Financial Executive for our Officer. the LP's as with Relations, Investor results Director Sallie I are fourth discuss Brad LP's LP's Bailey, you as of conference today Chief quarter Mike XXXX.

The As www.lpcorp.com. and are public call to we've done the at in accessed the a past, webcast webcast. we've be opened up this can doing

the Slide of to Slide Please the on provided included presentation. on I The X we've X the on a the with of the Additionally, remind everybody comment Form presentation I made will this to filing of has morning. discussion, do that two this non-GAAP have X-K We information of these attached our help call this later than reviewed all her with appendix discussion the already participants filing that information conjunction statements be on Rather reading in use be we presentation. incorporate supplemented earnings X-K the presentation by them forward-looking financial necessary of should aware afternoon this of the slides have with with filed statements, supplemental morning the reconciliations Sallie and morning. comments information. want plan been this referencing in about some these with the to be XX-K also reference. the supplemental release. our some

to the over call Now turn Brad. let me

Bradley Southern

at we our including hand for with strategic the and then call year touch call by joining leading market more by significant building thank goal solutions review morning. question-and-answer and begin transform this I'll our a growth allocation and accounts, our Sallie made progress an our continued outlook today's on the followed a all XXXX, of provide highlighted Mike, to of priorities. and all results by company. current XXXX, LP, the overview in-depth on In over year for significant development environment in a the capital us to of financial into review session. Thanks you operational was, progress LP I'll to

year In fact the since new in there XXXX housing considering a our achievement when strongest as meaningful were was fact, XXXX, that compared XXXX. many it half starts to

the with OSB, Our adjusted segments; increases quarter broad-based EBITDA, all performance ended EBITDA in fourth for South and margins year we in EWP, the revenue, was of and America. four and our Siding,

I of more I to capital that board share, per pleased which discuss also $X.XX quarterly are announce will detail our in dividend allocation We reinstated when strategy. has a our review

OSB. to strategic we in the continues benefited best a characterizes largest is LP. as products OSB positive from other pricing factors our on specialty as future specifically mix shift value and revenue the basis added While consolidated in the environment contributor well increasing a from of the including our products, be It Siding,

internal we target of from performance. growing how and is aspects to on what our setting is products new, measure not to aligning the is purpose Our all this achieve business degree which to our specialty Siding are new we goal

specialty that products specialty performance into a our from and dominates as throughout shareholder and ultimately be decouple and shift XXXX. this of able will pleased of commodity increasing made over result the deliberate end these OSB. out to opportunities, to As Siding am progress a sustainable stronger commodity I continue and and margin We and we OSB as greater growth to with focused percentage on we more continue profile, that results of value. the Siding actions time, believe revenue consistent transformation capacity other that the be we cycle increase and will products,

and volume with steady top provide Siding. the year-over-year of to QX from adjusted EBITDA XXXX with increase since growth Let in and together highlights starting line continue These quarter fourth pricing. trend achieved Siding results some in bottom me sales in We a record Siding.

the and growth of quarter a is of the Manitoba sales which part to believe SmartSide In housing conversion in addition, XXXX the our has to single-family share market our OSB strong outpaced value Recall our testament we starts high fourth growth offering. that XXXX since quality mill our Swan, justify Siding. volume of

growth for Creek, proceeding Siding Dawson current in Columbia. continued the British expectations strong project conversion Our justify

Siding of to in in restart project We our options mill will mill Minnesota. including continue or Brownfield ideal next for multiple evaluate Val-d'Or, Cook, the Quebec a

strong Turning quarter. to reported the quarter XXXX, second OSB, we of maintaining our the last since we quarter momentum best delivered

our We continue expectations. demand flooring OSB and growth legacy FlameBlock see with strong our in for to value-added mix product exceeding

following of on to We remain the focusing increase solid reflected strategy of first pleased our initiatives. record third especially in our turnaround and continue one quarter that in another quarter. the are value-add the my in our I am EWP, cost progress engineering productivity progress is segment products with after COO as assuming specialty the this January. volume EWP delivered make specialty near decline last and Pricing was value-add In robust we business improvement our of OSB priorities in commodity and a on volume. we in role pleased

margin efforts, underpinned collective reduction. cost sustainable As are strong a seeing result on volume are by in of and we focus our increases

our accelerated helps While while the volume and focus market this business, performance. sales recovering business LSL growing LVL spend, on certainly SG&A reducing housing has

South we continue steady America. make progress in Finally, to

In we in and manager, office to sales Buenos is Peru is in sales up our office hired Argentina, this track and running. a on Aires have Our open quarter.

Brazil, and function our production in is delivered sales record team on Chile operations in and the time project quarter. fourth our mill OSB In budget. reorganized new we have Our on

of recovery supply businesses fourth in across this which three price segments. product expansion economy health the against is passed performance driven recently housing package to American continued and boost market sector The driving and and likely the consumer spending is single-family overall near-term. continued in repair the housing the witnessed year-over-year tax and contributed a improved factors starts, the Our by These the remodel of our demand. backdrop delivered we quarter, also realization North reform investment on market. In building improvement, a healthy to housing basis and industry. saw The

are most how showing While about the market activity will is we've seen the robust the Overall, the some over legislation decade. market. tax concerns impact housing there in a

XXXX. confidence decade. For sales new rating in the a reached example, in single-family to highest November, the over NAHB in home its Index soared highest since December, figure And Builder

Let me our view conclude review as capital our ahead. framework level as of high the year allocation a with well on

we where allocation, goal for overarching In drive one we that strategically we is greatest value shareholders. can the terms believe capital and to our have deploy of capital

so our do will actively We sheet. by balance managing

through hand organic will excess growth generated We potential leverage year shareholder throughout flows existing and cash opportunities. enhance organic in to and cash on the returns

resources While to our the maintaining ongoing support liquidity necessary needs.

a into Our $XXX the will We our her in CapEx more of with priorities million. fall year ended color and buckets plans prepared a into provide bit Sallie almost three main remarks. balance cash

on plan liquidity working First, balance we million capital support to approximately needs. retain and sheet the to $XXX

and Secondly, core we M&A our plan in support to to value markets allocate adjacent and $XXX million our pursue technologies. products initiatives organic and to enhancing growth

and to Finally, quarterly to utilize opportunistic return through sustainably million we approximately capital share dividends will repurchases. $XXX shareholders,

and Home in of our and price. share have believe am as progress as The LP, despite stock income positive excited low Furthermore, and million environment been which ratio relative of their the the of housing underscores repurchase dividend, term. per share the demand. position GDP As outlay plan, growth. was macro when home in I to sales expect are commence inventory recent robust energized also remain old on strong our overall a as and low and in Interest it purchasing execution starts tune see near many by has level, low. After $XX with strong inventories and in prices estimated rates million the have growth we to when real and future. think be authorization our light announced, to authorized for remains about seven Board of We're you extremely improving we home the relatively affordable. months the to economy first under share has for the know, were is built quarterly massively first track an million. X phase is in are our The may enter $XXX since a for $X.XX an approximately and U.S. we my unemployment to of its late place as we made authorization and housing remain active to existing outlook healthy deploy begin record I be millennials has price home and XXXXs currently regular demographics opportunity years, The as current profile, late homes XXs in dividend encouraging. transition a annual pleased outlook a that strategic our Board the and CEO the we million the future. last to our confidence financial time X of as

believe of remain builder with recent data which we we high. that In demand remains in confidence based the based strong operate, trend single-family on terms upper will markets that the an on fact

we perspective, flat in anticipated XXXX saturation pricing based the pressure. starts. million on market remain we to first the a our housing forward in market quarter front, prepared relatively currently expect planning over On due From the to multi-family and budget the X.X

inventory channel normal and brief Logistics OSB central you with activity files. availability levels levels markets. at provide strong. remain is OSB SmartSide normal. our the related in availability the product order order current inventories tightened to levels. railcar have overview EWP north me are Let inventory supply and channel west inventories are lean. a of issues

In market SmartSide robust all across demand is terms demand, of segments.

In to strength market single-family our while the growth execute. sustainable favorable to short, XXXX entered and overall remain and on value us to remain with strong opportunity OSB, growth to from expectations. demand of shareholders. a strong position onuses drive due expect demand EWP to We remains the in environment We

bring an pursuing and team engage track management to have are company-wide. record we the that of type We on a transformation delivering of experienced

increasingly aligned build and and to team need and marketing enhanced assets operating a we win platform platform best-in-class with sales We supply on the chain focus goal are talented cost on a our our low flexible developing markets. and in optimized to

large do strategy building business. our While successfully become more solutions growing are is executing specialty we on to ahead, to a work there products leader with and a

with turn strong to sheet Sallie. a by to supported the balance opportunities. With capital to is that, let this call the us highest that provide return flexibility will the of All over deploy me

Sallie Bailey

will selective discussion segments balance results Thank of followed sheet with individual the the This I on of begin you, financial the Brad. fourth XXXX. quarter performance be by the and the the will full-year and review comments items. some for

take We questions. your will then

the fourth million EBITDA per fourth reported the presentation XX% quarter $XXX compared of in of of results. the of for net to $X.XX quarter discussion $X.XX for Slide the upon of compared operations million the in of $XX million quarter to $XX tax diluted XXXX X the the from to reported million of was $XXX continuing quarter per fourth million Fourth quarter consolidated fourth operations of or income Adjusted sales XX% normalized fourth $X.XX of from XXXX. quarter the share We net net to for of continuing a income $XXX XXXX. share in was a share $XX from fourth of as million million $XXX based or XXXX, XXXX. Adjusted per income Moving increase diluted the $X.XX quarter $XXX of XXXX. diluted XXXX million from quarter net share compared diluted in quarter or income rate per or

diluted to XXXX the a into operations $XXX upon normalized individual results. net For $XXX per million XXXX. of Net XX% move XXXX. forward financial just and tax housing XX% U.S. the share increase X In $XXX the business XX diluted XX% like million. in XXXX OSB compared XX% units income was or the best of XX% the was when of Fast in a we Adjusted full-year, or diluted X% Siding sales to per sales company's $X.X of operating compared housing XX% XX XXXX, OSB continuing of billion represent of the demand was for performance or $X.XX for segment is of almost sales million and year would diluted Adjusted starts, based the XX% revenue, XXXX. $XXX per represented $XXX million over U.S. business of the sales the XXXX in from I represented before $X.XX income. per were end the XXXX, and business $X.XX In in I business $XXX share operating highlights LP quadrupled of couple The share income. the compared operations with rate of Siding to give of from XXXX total starts for years, the over unit continuing represented doubled X.X markets share This income. a for XXXX. years, $X.XX of business total levels. sales million in and XX% to EBITDA have Company's billion, operated. company in segment million income of since In net operating has or below million XXXX now sales and the demand business the and reported the segment Siding income the operating just of $X.X to XX% XX% income reported net represents from million was net

that solutions into the company a financial reflect change. results LP transforming We are and building

X with as Slide OSB and SmartSide CanExel Hayward, Siding includes well segment to our This our of review results; a produced our as Wisconsin Siding. operation. segment products, starting on and at Moving

see Looking XXXX. in XXXX, conversion became segments Siding The our of we the million, $XXX part OSB to the in Dawson increase mill of effective fourth forward with mill. segment increase preparation XXXX. increase quarter from to XX% for Creek of from XX% were of Siding a the OSB sales XXXX quarter million mill this Siding in will an Dawson quarter of the Creek the the fourth January and X, $XX for adjusted for quarter EBITDA

on our as in with core Siding his a strategic in the transformation as are quarter of reflecting element continued segment, We our growth remarks. in Siding focus pleased Brad outlined increasing the growth fourth our

volumes production increased For the roughly the produced to quarter were up in and average due XX% X% in due We quarter, prices SmartSide changes markets. volume the were product demand up the XXXX increase. for to in sales mix XXXX increase of million to compared $XX OSB compared with added X% Siding in to Sales the an in to prices price key sales in EBITDA $XXX sales as for $XXX of million in million Siding is XX% results XX fourth XXXX. $XXX fourth was XX% million which XXXX of million XXXX. $XXX compared the comparable in OSB million levels of reported prices for up in Siding million $XXX XXXX from of SmartSide XXXX compared segment operating million the XXXX. XXXX. XXXX the The operating $XXX XXXX, income during quarter feet square in quarter adjusted segment and was Increases to SmartSide. to for to segment

the was the compared million $XXX fourth of to $X $XX Increased reported quarter XXXX. net EBITDA of million XXXX. XXXX fourth OSB sales manufacturing from Turning operating lower days had equals partially for $XXX quarter loss in Adjusted price. fourth quarter for compared which and in in billion compared production. up of were billion raw XX% higher, XXXX. $XXX higher volumes which Sales million from the of compared feet operations income to downtime for of the resulted in to square continuing in of X% and costs to by down because in compared the and XXXX. operating in million, million about OSB reported of sales results XX $XX million. Slide $XX million higher X. XX materials was the XXXX. million of sales improving to costs XXXX, quarter OSB million Pricing quarter The fourth operating quarter $X.X $XXX to XXXX OSB segment $XXX of offset million income sales the reported OSB XX% of fourth $XXX

for EBITDA X% XX% lower by to prices The operations the the basis. by sales XXXX. to in higher impact year-over-year was year. $XXX OSB Sales the of we on $XXX were were million reported million million and compared volumes XXXX, adjusted price of higher on compared For prior sales XXXX $XXX

quarter venture segment. of I-Joist, products. turn please Maine This to segment our other-related the OSB the of plywood Adjusted $X at Wood of million Products in Houlton, million EBITDA was the includes in XXXX. as million fourth produced X the as XXXX fourth of operations for XXXX. This were $XX of LSL quarter EWP and LVL were and pricing fourth Wood fourth quarter XXXX. compared in XX%. includes the from Lumber, $X segment up fourth our XXXX, continuing presentation LSL in from quarter up by quarter compared I-Joist produced to Murphy Abitibi fourth segment On Compared up Plywood. a the the $X for up of a Engineered a sales volumes Slide loss facility, quarter sale to XXXX and products the was of negative X%, volumes reported the million million of pricing quarter $X of recorded XX%. $XX XXXX, results arrangement sales and Products XX%, of up of The Now for XX%, pricing Laminated joint in fourth also I-Joist were Veneer LVL X%. shows up under with Strand I-Joist Engineered the which Laminated was volumes of year-over-year Lumber, income LVL basis, up of million to the was

was Adjusted The $X up million in $X million loss $XXX For operating sales XXXX. million to $XX were million income in million from EWP $XXX EBITDA XXXX, XXXX, XXXX. for to in improved of million, XXXX. compared a from segment's $XX

our a we segment Moving product on business of to from to our perspective. geographic American line presentation have X a for Slide changed the South perspective presentation,

presence Argentina, of is South performance product of indicator our of financial to through America addition the and sales As Peru by segment. line we the better in in a continue expand sales offices

quarter the and quarter fourth were for of $XX while income we EBITDA the of and quarter adjusted $XX and XXXX. XXXX. sales higher $X of sales Pricing fourth of million, Operating was million of $X OSB million income South the the The year-over-year, million X% compared adjusted For our of higher recorded EBITDA. $X XXXX. million XX% reported than to in fourth year-over-year. volumes quarter was in fourth of quarter, recorded segment flat million $XX American the was XXXX, operating OSB XX% $X Siding in were Siding, up million

recorded in $XX administrative of million compared EBITDA South million million, from It's million, XXXX. of to adjusted quarter million and fourth to and accruals. income $XX Total XXXX. $XXX related $XX the was our compared XXXX, management $XXX million XXXX, quarter to $X Operating to as American For million increased in compensation segment in $XX were $XX XXXX. than in of about general, the timing lower selling, million expenses XXXX primarily fourth on sales

For Capital American improvements for in as were we the productivity, were our $XXX growing of million, mainly as software with expenditures driven XXXX the maintenance increase South compensation especially our in refer covered Please from to Siding businesses, year the general, strategy to million year, $XXX our our priorities. by continue in well allocation X presentation. the mills. Slide selling, and OSB about capital administrative and expenses reinvest increases review. million up as expenses to associated $X expense, agreements Brad

key approximately working So of support before we sheet just end and retain the need. on at we capital balance approximately recap items $XXX on in million plan let move to to me the liquidity $XXX the cash year, Of million to questions. the the

million products and in Secondly, to And enhancing finally, reinstated shareholders share to markets, to capital $XXX adjacent repurchases. to to our pursue the and we will $XXX allocating growth support utilize are and technology. dividend approximately approximately acquisition return organic value we initiative opportunistic our quarterly newly million core and

and deployment price when relative share authorization $XXX we share value higher opportunities. and cash to currently shares and will the expectations noted, see have our place relative as Brad repurchase As we to we other returning in repurchase million in

$XXX for expenditures $XXX We Chile. maintenance $XXX which with cash in in million to million the capital Dawson return are associated mill growth third the and And and use million planning XXXX, million of projects is for the like and project. mill approximately conversion smaller capital remaining $XXX between approximately of is

the budget. the operating cash will result of as XX%. We to Canadian tax new legislation, our losses. tax a tax declined forward XX% net tax rate as We has our going rate normalized of use believe for XX% remain XXXX from normalized XX% that our rate around our a Finally, result

capital fluctuate cash will This XXXX. our the tax depending the in However, remarks. concludes rate amount in upon U.S. investment prepared our of

like go would we for Sonia, to queue the questions.

Operator

Instructions] Securities. first comes [Operator Our question TD Sean Thank of from Steuart you.

open. now is line Your

Sean Steuart

Thanks. Good morning.

Sallie Bailey

Good morning.

Sean Steuart

that Random let's of Few product and it decouple the front. you've from put segment, on type if wondering on volume, your within terms on comment Lengths pricing can the some numbers in progress OSB percentage couple transition and then the print? start the made touched on to products of questions, ability specialty around of you that you I'm for questions

Sallie Bailey

value way so fourth tend Sure. think call the in XXXX of best XXXX. same was the from about fourth Sean it sales that XX% in comes and third about I of we about specialty quarter, percentage quarter added, to XX% the of about quarter the think in it's sales, it the to that

Bradley Southern

I'll And pricing, speak the to Sean.

Random have are are be the So best adjusted have information have portfolio. a still our and products There couple where sheet, from and random. and our Lengths flooring couple sometimes, we all we'll can at those the as see legacy tied products a a of of the in weekly the are They Lengths you'll they're value adder contracts, that add not those someway mix, years. price from adder the but price value kind rest priced to two offer examples through for add but Random FlameBlock the we

Sean Steuart

us Okay. ramp calls period Thanks project, you on remind the I XXXX for the capacity there the expected think Question incremental that. guidance QX for that up, for of start Chilean America, expansion up project? South and previous can

Bradley Southern

feet. square million XXX is capacity the So

up would half that, capacity at of looking then QX. kind run the months QX, middle expect right, six by capacity maybe full half after pushing that I in XXXX. be of to You're by of and of end a in we're start of the

Sean Steuart

get I'll the back that. for Thanks in Okay. queue.

Bradley Southern

you. Thank Okay.

Operator

you. Thank

of Our Stephens. next from comes Connelly Mark question

Your line now is open.

Mark Connelly

Thank you.

your Can of you bottom lot how Wood also revenue that a the more bit market more the swings balances a talk and going to and little bringing through have Engineered LSL are to you other flow line. about pricing QX the for maybe? in been obviously products, You've Products OSB

Bradley Southern

OSB swings through that flows question? pricing your The is EWP

Mark Connelly

exactly. Yes,

Bradley Southern

Okay.

Mark Connelly

I-Joists? you seeing prices around How well are to going you'll the be - on

Bradley Southern

Okay.

price So and pretty pricing finished lumber swings especially product in independent business are the we EWP sheet that the much in the pricing or off in our pricing. pricing is short-term of OSB

is there we to products lumber keep impacts So through margin move have EWP in pricing last our as pricing able our but I-Joists for see OSB been beginning we improved finished and year businesses, for business. pace with those increases the

Mark Connelly

means your balances businesses were That and that a demand ago? are supply than your across EWP better year lot a they

Sallie Bailey

why I the relates I'm to Are to sure you great the business improvement there whether trying market? is that out it Mark. got in not figure and a such question

Mark Connelly

you has mean a and and selling I'm just I are something trying differently fixed so you is passing are consistently, things what clearly or changed - are to lot? demand more understand through your supply balance

Bradley Southern

Yes. understood. I Mark.

this definitely we year result really year in sorry EWP getting recover last look pricing and pricing line. increase a lumber in in I-Joists. product The our got as LVL So of our EWP, I'm helped the and pricing year last we're for to ability markets tighter

plant in Houlton, now are LVL - increasing pricing and plants, we around in dynamics Maine. both have our LSL we've for increase favorable through it, market are plants shifting to able and have the shifting our been also then So LVL been running volume we

of industry single-family kind the dynamics with prices housing the covering lumber - that So increase the in recovering has with of starts. improved market

Mark Connelly

thing, Okay. That's I'm the about super thought done. Thank lumber helpful, I especially hadn't higher you. that.

Sallie Bailey

Thanks Mark.

Operator

Thank you.

of Our Vertical next Research. Chip comes question from Dillon

now line Your is open.

Chip Dillon

Yes.

one you around So $XXX part? this CapEx would was the again thanks you the what is? much so Sallie I maintenance year know growth What other million. the for reiterate I for missed number, details. was mentioned just

Sallie Bailey

actually Well million third that internal, Dawson in Chip the and $XXX we're and for growth to primarily looking about is is Dawson. projects, at Chile million most mill $XXX $XXX million and of

Chip Dillon

produced I'm that. Okay. board OSB All quarter. more the said right. both I XX where gave the volumes Siding the XX% you yes, the million sorry on wise, I of sales sold were an this helpful. it fourth because XXXX same just fourth of up, you if than then went us segment didn't you and give in could the you know you XX Could period. But less guess, - feet that percentage up mentioned idea quarter change both you us sales That's a I I over tell And base volume, us million know know what

Sallie Bailey

Chip, we ago Yes. but volumes historically, OSB on this in large. ran increases that small, have quarters sold a that's the business really look so couple Siding percentage of the been the

we it the being good about but really a Creek, will raised Dawson segment, point, You OSB to tend going production start particularly forward the sales explicit on basis, be more pretty the of because the in in quarter-to-quarter really similar.

Chip Dillon

face the in Okay. Brad was know when That's in guess mentioning mid-third helpful. January. starting ramp there I in the starting And then you do put I Dawson quarter.

line some off a when it, make will of drop still ramp some making XXX% the at it startup. SmartSide point as in will it's dedicated, result you OSB see As and therefore, not is we commodity or that OSB

Bradley Southern

the and then timeline question me your through go directly. Chip, kind just of answer let

plant of are though it So to run QX is now if in reporting planning we SmartSide our that through OSB purposes. year, segment this for

We will bring three it conversions QX take two on the months plant Siding. all QX early the down in up for do to to and

run but to plant. as possible the are capability is in we retaining plan as full Our it commodity to that make OSB on Siding,

Chip Dillon

sorry. getting was I'm with mixed one, another I up

possible is know that's saying. pretty which that's physically if could right? market I you enough, be start a what not realistic not day there's you're but time Siding one, up good could on much curve is the It all So long run the it

Bradley Southern

Well, so a great question.

the we're and So not a think of rebuilding whole doing the lot about work the on plant end press. of it, green

it. panels So are strand today OSB through running we're essentially we with like

design the engineering plant around of back work conversion. the of the end most So and into goes

of usually parameters right limits is more us getting So what the quality on Siding.

OSB savings our will of central so volume out our Now by like would north immediate it's which on that much fact the back be West into production as move possible it's plant plan is logistics the moving early. mill. We And in Hayward, there. load country that there be and region to to then as volume is Coast, the plan exciting an some

OSB So as move the XXXX out we we get in will try like in to any have order run the throughout quality all central to would cruise to the to in region. much Dawson run north possible Dawson lined Siding due trained, incremental and parameters into back we as that

Chip Dillon

much. very Thanks sense. total Makes

Operator

you. Thank

Bank of Our next George comes question of Merrill Staphos from America Lynch.

Your line is now open.

John Babcock

for actually on John morning. Babcock Hey. is Good George. This

start to on I West Coast, about on transportation lot out you that clearly want earlier. referenced you the wondering here. little a we've issues I bit think the if was a Just OSB heard -

to improvement want get or some of starting to for time? signs Just you're this is persist a see something there could whether that sense

Bradley Southern

We're that inventory day to seeing any with there don't beginning had we're significant our we the sold QX. at the will rail, clean the impact issues as week but on of of and see out our of or so. to We've little improvement end build in over had we've believe signs there a last be warehouses product

John Babcock

a really provide of the And sense. not then to Okay. year ahead want and guidance, also but just look kind to get as realizing we

in or Siding you increase the If EWP for guys pricing year? any announced

Bradley Southern

that. I to since on public can that are we speak

effect price have increase then more a than with volume we for Siding EWP March. less strand to product, is X% a in And have in strand. we And increase announced our price So for X% X% announced robust been fiber price X. the increase which then February of

John Babcock

does - so much how Okay, the increase of account that volume for?

Bradley Southern

of to $XXX well a at it close of was fiber product, X% and X feet million X%. So feet strand billion then

as somewhat X% get the negotiate away in negotiate hits that will it market. can We that We realize strand.

So year brand is be for realization X% I we're would what X% shooting think really for to would this

John Babcock

question, you Thanks on for and that. had was And what the particularly about want a then and last sense the setting often? the also just the think I dividend get you're markets sustainability, how should considering for the of in factors level dividend to

Bradley Southern

our a - then The healthy the means sheet business. dividend flow and as thinking Let of thinking the that me I'm the follow-up. But we Siding can really We start right reliably to in strength future. have obviously dividend, is about we it my stable there generation Sallie this and now. very see is, way balance on earnings based fund stable the cash

getting even and hook expect thing EWP that is our confidence - obviously would evidence our as primarily us to more more business. we we've specially of company. investors and OSB and us I from confidence products Siding sustainable we're for the growth a ability and realistic I'm are transition of sustain So products grow dividend building into improvement But gives about as continued a into seen our in the year in thinking it to it this type the

Sallie Bailey

And yield then were of be so the to John, to up as share companies last look and we and the and appeared at when X% $X.XX reflected came around we copulate on would building a doing dividend, those with be looked price and X% year's average quarter. what the and were S&P XXX the really deals other the say what products level we company yield

John Babcock

you. Thank That's Yes. I have. all

Sallie Bailey

Thank you.

Operator

Thank you.

from Weintraub Mark Our comes of Research. question Buckingham next

is the Your line open.

Mark Weintraub

you. Thank

on like prior you have seen business, also we've quite from against not SmartSide had more but XX% nice volumes the the there increase. Hurricane there it year you and/or quarters that a up third going price little very post what the been mean comp, bit for pre-buy, I'm maybe the on XX% and a very in the fourth sounds pick step up? the sure strong been have in growth March color that First a that what additional volume was would why a else in quarter, activity might and was provide quarter second nice good I had that Siding and

Bradley Southern

single-family I in impact continued saw. rebates do for that into distributor Hurricane QX, sector some sales building think we the partners the stair we around construction that was with the as based hit November, timeframe, are steps I with - up that was should mention I December that have in figures. certain there do confidence we home on no homes So activity strong annually

So some last distributor effective some some for minute of be there was higher and those rebates, it for partners. of ordering would our order

bit of been So and through not move a have revenue QX. kind any which whole as a that didn't would lagging seeing we're we in but perspective to quarter. really that forward lot the of Sales a we lag little see of pull obviously

Sallie Bailey

we to decreased And hey, quarter, to we've year allowed And that number other up to the of this thing to first year's purchases. one that people buy Mark, about XX% add year their last to prior XX%.

Mark Weintraub

Yes, XXX%...?

Bradley Southern

Yes, XXX%.

Mark Weintraub

Okay, so and this previously was now it XXX% year it's XXX%?

Bradley Southern

and And where impactful. of we've that's large in that very really February increase, price little you're right Mark, December. the with January seen It's

Mark Weintraub

order business like kick strand it billion XXXX. mostly There and indicated until siding much capacity out potentially strand you And demand of relative siding really you to or XXXX. think holds of could magnitude. about I in of production was Creek XXXX and Dawson X in much And assuming get of sort your XXXX? how How strong, sounds Right. doesn't nice

Bradley Southern

have converted capacity And Valley we running in run be we're not that then It that in did that XXXX. our all could Swan into XXXX. the at OSB Siding. Hayward full Plenty, plant we at converted

be year based XXXX So SmartSide on to there will no limit our capacity. this sell ability on in

Mark Weintraub

on based to type XX% is volume the increases so to markets viable for million start, you housing type And XX% X.X that it anticipate XXXX? described type again of

Bradley Southern

Well to XX% with we versus revenue XX% and we're to XXXX. volume revenue growth for sticking speak our

Mark Weintraub

Okay.

Bradley Southern

target. The

Mark Weintraub

lastly. just Great. I And guess

if on Dawson going OSB So in pretty year, much to be to your that's making this correctly it's going Creek, understood reported be business? but I Siding

Bradley Southern

the was wanted into the we operating moved early the we have but that It in That January while the it. OSB to one that capturing reasons and we all segment reason are sure goes for it there make OSB it's Sallie did over rather thing segment over. year that project running correct. expense did other the expense the be And some may will move than to she that of Siding that running. should this we mention, our cost is was We reason and X, were was

Mark Weintraub

to guess Siding. type the I Will get that appreciate from the earnings be with be I we're of of of as plant, power is sense Siding maybe some a sort magnitude providing certainly of contribution us sense And going that a so Right. in you to and what can generate kind much and we think I lot of exclusively Dawson gets segment? little be it that guess different bit at segments differently Siding for in making a the a the multiples as a OSB about year going have this of and confused us businesses, facility pretty when that's to look

Sallie Bailey

the of added Siding as as we talk of that impact Yes. Mark, did to on that for results. go are the cost the we'll and understanding forward OSB include Q's segments for of presentation, the impact in the and conversion why facilitate information that we expensed we've that's the added Dawson our the And about the price about Swan, with the we segments. the on we'll volume also in

Mark Weintraub

Great. Thank you very much.

Operator

Thank you.

Equity from comes next question of Glazerman Our ROE Gail Research.

Your line open. now is

Gail Glazerman

Good morning. Hi.

Bradley Southern

Good morning.

Gail Glazerman

quickly seem maybe print, that would pretty imply on it value was it OSB pricing, quarter-on-quarter. was flat Just bit the kind then random a mix have added suggested your with that of stronger you

and what the the I'm average timing I might be verses on wondering else if wasn't some just can I performance? current perspective give you pricing have wondering So and assume explain XQ was where just that I'm if guess would timing that

Sallie Bailey

what of off is week a what random that one that's then spend a we positive talking quarter fact you to as we coming random and price time and happened foreshadowed third to two the quarter Gail, the actually and our fourth happened. were quarter of that quarter, when lot fact that about behind was last conference we negative over are printed Yes. to call the the and in

Gail Glazerman

would that but from the I mean based first there impact be where perspective, on in an we quarter Okay, are?

Sallie Bailey

change first there there think between the don't quarter between quarter fourth was was to a third and as dramatic the quarter quarter. I fourth

Gail Glazerman

I fourth there any in was keeping and impact would legacy financial there there a in was the of just And Okay. Valley, quarter, the another material note, first kind any quick be quarter? impact fire think at Peace

Bradley Southern

lost downtime break December, then some the of XX had over We in XX X days of and due about into scheduled Christmas fire up moved that and We the million million January running we feet. downtime No. that to about that maintenance outage. made in we by

weren't some volume we'll Valley January So Peace in expecting. up we in pick that

minimal So across the QX us. will quarters, to impact the be and two QX

Gail Glazerman

think or you just in in further some that us think Quebec changes of give you can Siding terms your next make Brad thought perspective you about is as to And and this process project, about Minnesota? year, the is doing and impact you expect the does timing Okay. tax that decision conversion something

Bradley Southern

That's a question. great

mentioned more about as, and us very XXXX growth another mix next us to conversion when is in differences where I behind So well let Dawson the me rates to and our mill. I'd as important first. before we where do timing to year the see talk the put being as decision at the that look able as next get get because

we decision, So If Val-d'Or that growth an more see but against operating that because related, XX-foot like is go mentioned a Cook. lap us in press. a would start bias see the from standpoint, before, products we more mill the that earlier kind has Val-d'Or and that that pushes I panel into to growth this if will trim up of

far a a goes and certainly construction then phase. larger engineering most be Val-d'Or will as longer require Cook as plant Secondly, capacity and

to to it it want be and a get more little would there. we would that do started on So bit earlier costly

on at by the options the investments in than as in more the do As basis, look rate lower definition these tax tax far change, investment so U.S. tax they the the have U.S. competitive in we were past. after an made

the will far So as into return financial those the play calculating that decision options. - the differences financial between in two as

Gail Glazerman

Okay. last And if one in squeeze could one. just

you I that how just wondering than impact rates? housing, constraints past. as in at the you've how are about Just seen in bit and interest more look think of am and aggressive labor you potential worried I confident I it's the a rising are

Bradley Southern

back years. in it for budget the so it's good cycle bit Gail, consensus question. overshot current budget consistently in establishes say another four three housing number We've is our little starts have what the October. successfully our a would And think predicted probably don't or I we and last below I

as if I it to OSB, weakness the million, would will product and I to I materially a when Siding labor. think So I hear don't little be I dependent impact addressing in will right much because is but X.X in there with XXXX. multi-family expectations hear different obviously don't say on that we downside single-family bias think across we I resolved that. around some have builders the primary stories our is that, do constraint begun hit you will and a are think all the more and don't I to segments. it agree success anyway to now talking what be in our

be just it so And ability be homes facing. they're build X.X given industry, actually million won't we the labor constraints of hit starts, don't an housing, many the demand the a but I as to could that homebuilders for think it issue

Gail Glazerman

Okay. Thank you.

Sallie Bailey

Gail. Thanks

Operator

Thank you.

from Steve next comes Davidson. Chercover question D.A. of Our

line now Your open. is

Steven Chercover

everyone. morning, Good Thanks.

Bradley Southern

morning, Steve. Good

Steven Chercover

about we pressures it to want year, off? was I to looks down So are it by it talk costs, think because but alluded it a days number little absent QX input in have it been aware down, in great was a caused you and bit so costs discussing or the like of or be I price, manufacturing there EBITDA would downtime that other actually maintenance inflationary should OSB,

Sallie Bailey

up in in cost up everything pretty somewhere we million. Most that back did got resin pretty XXXX, We increases and so Steve, MDI, significant have waxes. in showed of some XXXX. $XX gave we around much

So you're did some headwind. right, we significant have

Steven Chercover

And persist this do you expect that to year?

Sallie Bailey

do to maybe that biggest general also maybe cost MDI expect Yes, being in are same a million. that, that solids pretty we a million, little piece do. the around lacks. we'll $XX We $XX material - increases We similar of and raw see but in see the do level that PF

Steven Chercover

So and XXXX over that's above levels?

Sallie Bailey

correct. That is

Steven Chercover

And about wood? how

Sallie Bailey

similar little increased and EWP a business. cost were a expect in do that in was But where OSB in XXXX of bit maybe to OSB business. business will think XXXX, Well, net we actually we to see in interestingly in the we our in Siding also positive But some be wood XXXX better. our most

Steven Chercover

so a to like portfolio of that the in grow? enter to kind products maybe currently solutions session, is or it's there are late this in be in that “ into picture. your you'd and But Are your any effort building big Okay company”.

Bradley Southern

volume our for us Siding be for products, major Yes, smooth strand opportunity into for put the key that would right is a that us Siding so focus business. to for portfolio incremental now Siding

of the the in product are We phase now. testing

with like so have deck Siding. in that we all on that And both OSB hands in products that developing on and

Steven Chercover

Great.

Okay, you. thank

Sallie Bailey

Steve. Thank you,

Bradley Southern

welcome. You're

Operator

Thank you.

Quinn Paul comes Louisiana-Pacific next from Corporation. of Our question

now Your is open. line

Paul Quinn

a got I've new job. Actually

Bradley Southern

Welcome aboard Paul.

Sallie Bailey

Yes, exactly.

Paul Quinn

the I a want send to checks Yes, up here. couple add. to questions got I Canada

that take additions Just Dawson to or with investors the be any to at capacity and seem three mills if I kind XXX Creek, capacity associated to square OSB assume and think XX% very get million it's feet I take try conversion you'll sensitive what maybe withdraws, operating to months, of about to you I is lose? rate out XX for the that it about figure if close downtime

Bradley Southern

Yes. out I math of would months. the do will two XX - down it be XX the out to two of the

Paul Quinn

color maybe addition on some if in in you're the on us just up in the you in are a hearing, Alabama less. side, so we've Norbord Tolko mill and you what Alberta. Quebec? Texas hearing What give and got could the And mill then Forex little obviously Okay, Martco bit on

Bradley Southern

is of there saying probably for of obviously some those really either those producing and are that deal new against all not have But of, the so on there. of delay aware into market we're any type both mills. much product don't We information more happening the mills one I expectations what's

Paul Quinn

quarter? in QX, a - you the OSB turning then on basis and contribution just guess just Okay, I you to, made in EBITDA OSB

Sallie Bailey

maybe of contribution I bottom within impact and of the price that in the the the to Paul? probably mean than increases, that line. lot would improvement really caused mill something overall that EWP the I to have played say from what Why the came don't a capacity rather okay. the was I quarter utilization

Paul Quinn

So with side, what Siding the to OSB be we're contribution on is from Hayward seeing on not going par right?

Sallie Bailey

No, that's correct.

Paul Quinn

respective OSB could America metric South of OSB follow run just I you between kind two the suspect and of size question on last towards Siding? then those us split some and I but the and Okay, Siding like to give businesses. if I

Sallie Bailey

it the Brazil is have head. OSB. primarily I don't my that would is all of guess know that I off top of OSB, because

Paul Quinn

have. Okay. of Thanks. I all That's Best luck.

Sallie Bailey

Great. Thank you.

Operator

you. Thank

Ketan from Markets. comes of Capital next Mamtora Our question BMO

is open. now Your line

Ketan Mamtora

a Brad Sallie. very year Hi, you. on Congrats strong and thank

Bradley Southern

you. Thank

Sallie Bailey

you. Thank

Ketan Mamtora

First the either let's next just or to if back you whatever year Siding, project hypothetically Cook the - start question, us come that to at you I maybe that want on working this start next - remind you say were can it. to the of just Val-d'Or, on

Val-d'Or? were can it then to when just same us if and producing the might Cook, help you So that start be understand for

Bradley Southern

Yes.

would - would get bored if a next about be up difference if say Cook, XXXX early minus be start XX plus and years a or to would XXXX we to year, were early and Val-d'Or Cook we approval up start I quarter. So be

Ketan Mamtora

and OSB when Got Cook up fair produce to remind it. us be like How they can much And almost it you then new that will come produce - a mills initially? because mill. time so say a is time you OSB for period to of would will the have

Bradley Southern

Yes. Ketan. That's question, great

So I as up out. systems that take out on we time think lined would we lined possible to would And would want because I quality up, to OSB once initially at like from a run quality OSB start long as some systems mill get perspective. start get manufacturing either and to all a our the run

year, would we up a those we plants of so run months, our want somewhere quarters OSB. So a we starting ideal. I be four six to say on not of time will need minimum decision two be OSB playing would be believe would what into sufficient would will running between to

Ketan Mamtora

to it the able the supply mid-XXXX, to XXXX Creek, out about maxed would is you by way the be that - Got is to Dawson basically that or be think it. And you of incremental from will fair say then end right it?

Bradley Southern

with capacity Cook, current to if we obviously we'll go look we'll mix, capacity. being in XXXX without to or sufficient where at system the need mill at Dawson in on the we rate plant get and mean expansion but when a say product our to that the I full Ketan would I confidently Well, XXXX that the have conversion growth operating like that's XXXX depends feel us and we XXXX.

Ketan Mamtora

clarification, that number included that growth it Dawson Creek talked organic that the CapEx million on other And one it. in just about, you so then XXX separate or is always that? from is Got

Bradley Southern

of We to separate think We as building maintenance about that the need XXX that well part or Val-d'Or million. guidance being past. the the for that Sallie mill CapEx Chilean as that in given we're we now Dawson the possible Cook for try that capital from restart has

Ketan Mamtora

Creek was that also number? So CapEx Dawson in

Bradley Southern

Correct.

Ketan Mamtora

of then you just question. mills of kind about I talk your an something, construction just one can sort from M&A give timber. interesting or standpoint, laminated a OSB in existing kind you When to or Got you Aspen multi-family smooth just it. last in part about something the more And in, talked think presence of what terms will of more from in you, general Siding, which cross like of Wood is but Basket the

Just to some us give sense is you? most what interesting of

Bradley Southern

Okay.

future us. resistant small I that convert a or in using sheet, be example secure be of things, Wood basis to was our OSB barrier play a really to compared And deciding and two OSB balance one. investment believe So that you're the in our acquisition, which Aspen right for we with category. the the was the about would We mills would in key we could but key interested leadership Ketan priority

structural So panels interested acquisitions and know be and that Engineered in Siding would or that that we that something businesses in would customers Wood we pursuing. we markets understand either know that we're complement

Ketan Mamtora

it Got it. turn and I'll And over. just question That's helpful. last

any competitors are at at quite your adding place is in of supply, of bit One market it the moment? of a impact the seeing Siding you all in

Bradley Southern

yet. impact No

Ketan Mamtora

Okay. Very helpful.

Sorry go ahead Sallie.

Sallie Bailey

I start until not those factories intended most to are of think up XXXX.

Ketan Mamtora

Gotcha.

turn it luck XXXX. That's Okay. helpful. very over. Good in I'll

Sallie Bailey

you. Thank

Bradley Southern

you. Thank

Operator

you. of Buckingham from Our Thank comes [Operator Mark question Research. Weintraub Instructions] next

Mark Weintraub

now particular on quickly the allocation. repurchase got suggest math the in revisit I should had quite mentioned which you return wasn't that sure of one-year and $XXX $XXX would the I presumably you. over represent least bucket, program? $XX $XXX which that on at capital wanted would I for the then Thank repurchase million about to million, would the you so share million million, think or capital and share in And well primarily I just you we mentioned dividend million $XXX think you've know if seem because as about to of

Bradley Southern

and the future then is remaining authorization that so think I million dividends that wise execute do million then if go repurchase say to to our plan our - Board further current then would then to get we we've to authorization. we thing pay thought million, to $XXX forever So would share the that's back if now for dividends if $XXX discussed and and for that's would do $XXX because want we was we we we today a

Mark Weintraub

And generating free will you be meeting Where about? seeing or most right cash markets which presumably we're to free you How is That's capital that have. cash, capital likely types question. the which of the directed investments we a goals to? now, fair they're be lead to think even various might in would that buckets particularly

Bradley Southern

our million that cash we that would above to form. in as of be - growth cash shareholders some be should of the Well, free the returned capital, would liquidity $XXX capital and think

we investments back M&A and we'll that we Siding in look shareholders would go in for we continue that dynamic to an big can opportunities that But are M&A stating returning Now change it's opportunities, the are situation through about mills that as make to every quarter capital we today we as but the looking at at $XXX above grow and but that, way. million more this. effective talk in the a us, do

Mark Weintraub

you. Okay, thank

Operator

we follow-up And of from you. Vertical do Thank a Dillon Chip have question Research.

open. now is line Your

Chip Dillon

bridge Cook. would This I to product, but more for they of where had make heard was misunderstand that grows Creek a clarification I there to between. Yes tucked I you could patience. course thought Did Brad would thanks might to I you the you project? need just But right probably as explain more expect capacity and to types XX/XX different one along is Val-d'Or you of you know in that market I if Dawson If you in of cause. the Cook. and your mentioned

Bradley Southern

Yes.

of I given when would we what essentially was our new current just So on form look at be in given there the any XXXX. was growth, need attempting so running would - system to explain we around conversion sort next thinking Dawson that and for capacity

point because in other. up. not want Cook the to a making of get mix at I'm essentially now we so take sequence that mill by through start I Val-d'Or or on was, to Maybe thinking to was as statement Okay, saying year confusing a the versus or that's Brownfield that's a the before Cook, one we back look this start

time of did would with best to have working have we that So and on facility would Val-d'Or. into we to the is year earlier construction that we it going longer about thought option. so always year if then Val-d'Or, for decide be than, to the Cook get a We're next

Chip Dillon

you away? for left a Makes would way to the other maybe some one long about of make think perfect the market sense, next really that's might but pick as or is, those sense and other two mid-decade, that and grows it is day then option then decade the

Bradley Southern

exactly… Chip, Correct,

Chip Dillon

Okay.

you. Sorry about the Thank confusion.

Bradley Southern

caused I if apologies My it.

Sallie Bailey

Okay.

time the that's think have we all I questions. Sonia, for

the if provide you replay our in thank could participating for to please So call. like everybody number

I always are may you We with good and a you have. Thank you here have hope questions day. any follow-up

Operator

for and today's today's in gentlemen, conference. Ladies This participating program. thank conclude you

You may all disconnect. have Everyone day. great a

Louisiana-Pacific (LPX) 13 Feb 182017 Q4 Earnings call transcript