LPX - Earnings call transcript Q3 2018 | Louisiana-Pacific Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the 3rd Quarter 2018 Louisiana-Pacific Corporation Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call may be recorded. I would now like to turn the conference over to Mike Kinney.

You may begin.

Michael Kinney

good and Nicole, you, morning, everybody. Thank for to discuss you of joining the us today call XXXX. conference our LPs quarter on third Thank financial for results today Financial Kinney, Officer. and Interim Mike Southern, Chief I'm I'm Chief LPs joined by Executive Brad LPs Officer,

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

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

over call Brad. to the turn me let Now

William Southern

today's call higher-margin give broad-based and just our shifting as transformation a roadmap. are aspects that important We business, change building our X more transition to in of last from and focusing and believe will results the can create solid session. more the our specialty long-term high-performance for positioning continued confidence across note and strategic year, OSB, dominates to the it's outlook of of of detail focus by followed through of the overview decoupling value-add distinctive to approaching review thank and in proposition, cycle the leading Rather, a a and that the products. quarters through this transformation delivered all followed is the over this advantage the financial strategy total market serving the and the lead and a such higher Siding transformation, will the we performance LPs this innovation an in including our by focus a that you commodity us our I'll environment for of goal you strategic capital transportation opportunities, with We how building and strong culture in this current a Mike progress allocation Mike, begin value. with selling OSB is and our priorities. us It's the take strategic actively of products sustain our shareholder cycle. shareholder consistent performance-based validation our customer segments, on quarter Thanks, and each Against the margin greater results joining ultimate provide more of siding. our production capacity executing profitable highlighted commodity stronger a then sustainable we from for growth company headwinds, and and a quarter, results, the highlights results markets to profile pricing quarter current been solutions quarter the of this by this market, company, for morning. brand the have results not first question-and-answer the and competitive where third working of top-tier value transformation of of into increased year, on growing this the the innovative, we returns. merits matter of that We LP shift all backdrop a growth remainder introduced and stability delivering

more have to promises. are we to we work on deliver beginning do, these While

me recently to review effort culture. an build a performance-based a of with in-depth organization few We and our starting structure. completed Let provide our examples quick corporate organizational

Our an enables that structure transformation ownership, defines our us culture fosters with strategy accountability, the and dependent we to organizational aligns is clearly upon to high-performance results having a deliver expect.

for we from in management a For a structure, each each structure, in business matrix and functional this of corporate management which reason, which their for of Through leadership. business, OSB directly teams have this certain business embeds complete reporting support EWP Siding, execution. the to P&L have business strategic accountability functional were accountable shifted all line will our aspects and structure, segment facets

structure been run operations business America will structure market with and reducing costs. each by management positioning competitiveness to resource our better LPs corporate This infrastructure Our new by opportunities under line efficiency inception. function improve business the a have since aligning growth South overall by and strengthen line management our

in to corporate of took closing we our we U.S. result is decided Oregon operations. The end As that look be our our review, in and be business in also Hayden will offices The into XXXX. geographical consolidate Idaho, office combined locations. our Lake, an these of the functions some Washington additional element offices administrative and a Vancouver, footprint across national Portland, will close at the

starting with Let of now to business turn a Siding. me our review segments

for remains strand delivered in prior and strong net order intake. we pleased momentum to and volume SmartSide. are record report Pricing to We sales, EBITDA, Siding strand year compared fiber continued as strong strand

Inventories we are be anticipated This penetration During growth to revenue validates the XX% for SmartSide at to full and achieved outperforms channel revenue growth. on significantly normal year products XX% deliver levels. diversified housing and continue the quarter market our track strategy. growth in for XX% growth to our strand

Columbia on time the conversion and project. budget, to proceed, Dawson on continue Creek, with We British

November, we of middle to the OSB take XXXX. targeting siding restarting quarter mill mill in off-line the and expect of We are the the first in

We expect to during and first $X $X from impact the period fourth off-line quarter potential the an approximately during million the be this additional million quarter.

an from experience XXXX with impact QX of our $XX our and consistent conversion year. that of Swan QX is million over experienced this Valley which comparison, project in we mill a As during

Wet despite to Turning during results, and pricing QX, the of latter volume realization and result, strong during many the activity half lengths our as than now to higher markets previous in we OSB inventories weather quarters. jobsite headwinds. southern a achieved quarter across slowed random ended price relative

shifting on mix, our year focus in This to down delivered the improving continued especially the sales by to versus prior compared commodity OSB, value-added Our prior volumes quarter. X% sales with compares sales strong quarter, year quarter. results X% the

diversifying specialty reminder, cycle. is a include stable margins to our area generate more key stronger, the focus mix OSB As products a because through these sales more

some increase our OSB on to delivered in To or equivalent drive initiative plants OEE X% a competitiveness an operational the year-over-year run plant new capacity annual This provide this report X/X by taking basis. effort our increase this work, across we and a as mills in in efficiency on pleased been a am profitability system time, an is mill siding of have as well. We our efficiency in We QX, basis. I action very that, underway overall context, quality. X% a improve is to a to adding of now OEE. effectiveness, to to the as result internally equipment refer of increasing of and

for rebuild Texas we quarter, press continues locked at approximately the down days. The Carthage, a plant upcoming our mill. for pricing within XX in schedule an first go in Additionally will Commodity on quarter pressure falling source October. continue take, with of our a to took, and response, In commodity throughout the actions our we to within OSB demand. to prices production to business, appropriate match will adjust be the

the quarter. initiatives during EWP, make against our progress we continue to EWP ongoing to Turning

in Our for the sales we prior average to price demand driver quarter-over-quarter, year quarter with third beating the story a strong key improved business. XX%. period growth see by LSL, this turnaround and the sales LSL continue in in is

levels for EWP these as experience in with aligned higher demand softer LVL of I-Joists We increases cost for which Overall well price have the continue channel for products. demand. for outpaced and are to sales, average as inventory

North Carolina our mid-December. significant expect Thankfully, did be of facility Wilmington, significant Hurricane facility property to safe; however, down damage. the and all are Our sustain sustained employees through Florence, we damage from LVL many

Columbia have provide color we finished by section. financial from in the customers supply been his agreement. Wilmington, inventory at more servicing LVL British Mike For through on Western from third-party the our LP Golden, impact and goods will in inventory in some plant interim, supplemented a

LP country, report up financial second in to region. softening record in operations July, Brazil of team our quarter on time the line start In South we in the a since America, well has in slower did budget. from during the importers. the a I'm demand the tremendous in in pleased on market experience pressure and pricing highest as job market in We Finally, environment. started a third Brazil, The as Chile press the done line, Panguipulli difficult

expect recovery and quarter. this to monitoring are We the fourth closely during see

strength optimistic remain the a and growth. of Before low about few economy economic want the see to allocation and with current positive, our small steady for Mike, businesses sentiment a robust call remainder priorities. I reflective take moments discuss We to I of income our unemployment Builder year of and consumers outlook capital combination continued off hand and a to and future conditions. remains the

supply historical availability to prices housing affordability. rates levels, While affordable and are remain home affecting interest relative

can drive we greatest balance and outlook Balancing our for trends Looking to quarter demographic ahead, authorization construction during constraints, with including almost due we the this million million the $XXX existing to completing anticipate generation. commitment our capital we the in shares, million Consistent XXXX. to we for scarcity. value continue are the solid housing deploy believe rates the X.X deployed Millennial interest a to favorable repurchase where shareholders, strategically $XX related to approved of labor rising

$XXX $XXX We be announced million under To worth, leaving X.X the we shares, date, deployed. also quarter. began million authorization or repurchased we've to of shares $XXX approximately which new last repurchasing million million,

next end approach And we that in later month. Xrd are In $X.XX we addition, paid dividend, paying Friday conclusion, well-positioned of August reinstating another our in the long will be February. we payment this last we In the we for term the dividend the year. the dividend as since announced

our into that our this solutions pleased value results we long-term of are reflect progress with the and of leading We building strategy. transformation a believe the provider,

Looking to businesses. return products to to our With will in capital with ahead, specialty deploy that, Mike. we sheet me strong our highest balance the continue turn invest to while let over opportunities leverage call continuing the

Michael Kinney

of the review quarter my third balance Thanks, selected the a individual XXXX. followed by with financial Brad. the performance discussion begin segments sheet the be items. comments on of will for This some results will and I of

the third quarter $XXX consolidated of million sales the $XXX for XXXX. XXXX. of Adjusted per X% per a of net million diluted the from X the was diluted income from for $X.XX in third the compared in increase net XXXX, Slide quarter of to reported to continuing a of was third in share operations or results. Moving EBITDA $X.XX income million third quarter We compared of discussion presentation Net to third quarter XXXX. or quarter million $XXX share of quarter XXXX $XXX million $XXX the the of

in Turning first to was XXXX, an $XXX to same $XXX million million, net $XXX the were continuing XX% Adjusted million, diluted per our from $X.XX from per of increase X months year-over-year. XXXX. billion, $XXX Net first share, operations up in or months income share, the $X.XX XXXX. results of $X.X EBITDA compared the of diluted was period or for X sales million

This one a as the a Hayward, siding was million $XX the our review and of Dawson and million, Siding OSB XXXX. Slide third on our from Starting results. increase Operating operation. million includes reported products line fiber operation and quarter income our with to Creek representing our on third $X million, well produced quarter CanExel of X% Wisconsin SmartSide Siding.. as segment an of X $XX and adjusted $XXX and of of segment sales strand Moving XXXX. was The of EBITDA increase segment from

due prices SmartSide up X% were of first were while sales by with increase fiber, X%. quarter, mix the product quarter changes volumes prices XX%. in implemented to the a average strand in sales In sales the XXXX, and down For SmartSide price were XX%, higher up volumes

OSB the for prepare our fiber the later a SmartSide of offerings fiber from we during OSB products, estimate in We to to XXXX, million the EBITDA seek into the $X.X operations quarter a position we compared our slowed is and siding mill feet quarter for XXXX segment continue OSB continue of of continuing year. XXXX. we third adjusted with produced this associated sold about conversion demand of XXX consistent prices as segment the return. opportunities some to which quarter million as was third raised million We which As in our $X.X third of quarter mill the Dawson reminder, maximize to Siding with in on to this

Canadian compared and the to third down rebalancing a Volume the flat Canada. quarter X% these prices majority XX% made customers were sales down was to as as primarily XXXX, of in their in inventories. XXXX, CanExel are due of For in quarter dollars

represents a reminder, sales, the X CanExel upon of about based sales. As X% of Siding our last total years

X operating million the of first months segment of income to was compared EBITDA XXXX, XXXX. in million, first XXXX. Adjusted an million year-over-year. Siding X X% were the million compared $XXX million For $XXX $XXX Siding of $XXX months sales of increase was in to same period $XXX

the from quarter Slide EBITDA operations XXXX. third $XXX of sales of for the third compared flat with income million, net continuing million Operating XXXX. in about million XXXX was $XXX million of to X, $XXX $XXX to income the was OSB Adjusted quarter Turning of compared reported to $XXX million third of quarter XXXX. in

commodity resulted value-add quarter, prices increase sales was are lower, Generally, higher. major by operating OSB higher pricing pricing the the X% sales from our The decrease based in commodity decreased in value-add OSB the how in lines. products X% value-add while our of lower value-add commodity products million. were products in set. and was Pricing X% The decrease in volumes for in For across product results upon trail X% were $X value-add. volumes volume OSB in all

the In costs, primarily in we reduced raw addition price, to resin. material increases saw sales

million were was compared XXXX, million increase XX% the associated million million OSB Canadian compared for first $XXX improvements. to Western period increases increase, capital sales $X $XXX the of income offset XXXX. XXXX. maintenance this to $XXX X first raw For of operations was $XXX months accounted months in EBITDA X our costs material Operating same costs related of downtime logistics the $XXX manufacturing by an in to Adjusted The year-over-year. due prices increase OSB million billion, of segment and with of and in to in

plus Wood Now EWP. the of by agreement includes related I-Joist joint turning our X produced sale at segment of products. Laminated LVL Engineered Lumber, presentation, shows Maine Houlton, plywood under facility, contract Resolute segment. segment Laminated results This with manufacturing Please the Lumber, and venture OSB The Products also the Plywood.. a to Veneer turn produced which Slide other or products Murphy to our I-Joist, the includes Strand from

million, LSL, of continuing quarter, quarter million XXXX. $XX up third the For of XXXX. was $X in million of income volumes up LVL was down in compared EWP to to last in LDL year. X% LSL sales million was XX%, XX%. quarter from EBITDA the were to third million Operating XX% $XXX $XX million and from XXXX. compared $XX $X while volumes compared operations were the quarter I-Joist Pricing same up third in Adjusted the were up third in quarter volumes in X% were I-Joist. the X%

an increase EBITDA the of XXXX. XXXX, was million compared first of period. $XXX to in million in to was million, $XX million X compared of $XX as sales $XX prior-year EWP operating EWP income same of million the Adjusted period XX% the reported months $XX For year-over-year.

from operating during deductible. excess repairs charges costs including receive the As capital of Carolina be are third third of the our $X of in will is the quarter The damage for associated Florence has in anticipate the fourth that million we carriers included $XX XXXX. for costs incurred will expected of Brad quarter, million been $X.X It We operation our XXXX. additional Wilmington, our temporarily other of to insurance Hurricane in LVL quarter our reimbursement $XX noted suffered and with cost credits and shut in initial down. cleanup million North and

quarter, both presentation, were South $X of to economic OSB income million. Slide lower Siding. America and South of X% market quarter about across adjusted on lower up Chile Volumes general America. due of than all the segment on in in slowing weakness and million $X was sales Pricing OSB $XX reported the in and X% housing X Moving to the and Siding for of was XXXX. our $X million was million, third EBITDA Operating the

For was EBITDA Segment the million America operating XXXX, reported increase million $XX of of same in X first million, XXXX. sales X income the the of months $XX compared million as first $XXX was of our year-over-year. South million XXXX. $XX to operations an months X% compared $XX to of Adjusted period in

to XXXX. same Turning $XX to million quarter our million total costs compared $XX the quarter, for SG&A in costs were in the

For our $XXX marketing the These our months, primarily and in investment areas. are XXXX. costs related million, up X the million total sales were to increases SG&A first increased in $XXX from

these In months. for million terms for quarter were the at first costs, of the $XX and unallocated million $XX slightly lower our X

a interest given by unallocated to organization, these decrease the noted, higher Brad to the costs are income as anticipate do realignment redeployed line continue As our into to compared in balances management XXXX million we Net refer was third rates. Please presentation. the third driven cash to and higher interest $X the quarter of Slide of improved the the XXXX, by of quarter businesses. to as X

As equivalents of with were and million. cash first our had from of of December XXXX $XX expenditures $XXX and revenue for $XXX Inventory we X the to million the XX, up cash adoption XXXX, months is related new in-transits of this of September XX, million. Capital standard. recognition the

Thank for could expenditures year $XXX which the growth the for you, now with $XXX and to Nicole, go we million to associated is capital $XXX million $XXX projects. and projecting are We million if of full at million, maintenance queue.

Operator

[Operator Instructions].

George America line Bank of of comes from of first Staphos question Merrill Lynch. Our the

John Babcock

Babcock actually George. for the is This line on John

you and you more Can talk little want the structure also line follow-up are bit a on this of the about to decision management what see the that led little quickly style benefits what to versus a to matrix structure? provide color there. Just with bit management change regards

William Southern

Sure, Thanks. John.

because related my a more At in around incremental these So value. matrix prepared items either reside growth -- as business have drive our they're referenced Predominantly, series we history strategic operations, our of obviously, organization. to part shareholder lines, I of aligning a we're initiatives efficient our strategy, comments. product agenda a LP, we as corporation to of or more within functional having

I think we portfolio we had when more that in it's than businesses our a do today. several legacy,

structure felt was So the structure away with we organization year to support the functional way accountability all matrix into the directly organization past well. the through and of cost functional like the embed at align business. and really we efficiency businesses, around And align over went better provide we looked to businesses strategic agenda as the will that it all is we our executing and on wanted our that was those assigned, some being our also as our and better around -- from feel like move

the So much the and functional it process will and business that functionally this of by the thought that in We of end study. from was coming today the initiating engaged have out went year. the really leadership and did fully it and the we're the initiative into pretty up cross rolling with new structure, our with catalyst representatives in in place

John Babcock

about in then OSB stand for the also Thanks and as they stand. business, your wondering And where could you talk inventories I was the how just market are now, that. files order if channel Okay. to conditions moving

William Southern

Okay.

what everybody's in I happened pretty much understands So QX. think

over America. ease some the in that been certainly supply in that I the within definitely North capacity the some could and rains do through. hurricane rains so helped, -- first there. for of the months the did build come into XX product side, X have the channel past And with logistics Southeast. inventory the market us issues the in industry, around us second and preparation on pre-buy that the additions then landed and associated an volume were up coming we've on the was as softer and hurricanes working Weather especially Starts QX move truly fortunately, quarter all plagued the October. we as the in kind -- that believe, in we Texas there's of reminder, hasn't online issues, of there a Just were

we And pricing pressure. saw so

especially good we think files And that have cautious As where have have I pricing lengths seen we look the as little a X been do firm our out last floor, -- as been we encouraged X by feel October, bit falling, our position. about week of up bit. taking rapidly about bounce. current we buyers as were order so was they've currently a But a random so saw weeks, have price to positions into we X but weeks, looking we for reports little

were the those good far think in inventory levels do in taken hurricanes, channel, associated pre-builds as now. September positions inventory are As feel that October worked some were we've some the that about with I inventory, prior the through and where inventories or but higher-than-normal to -- pretty

John Babcock

OSB a then then it from Thank drivers big of kind Siding, you. within on your last commentary rather bit on Has quarter. and current little had could, And looks that? levels? also like impact are if how any volumes just -- pricing. question of prices in you down or on viewing the just were last were that And Siding on What pricing that customers just tagging

Michael Kinney

is full and maybe product not price price. shipments it's of still when the trucks getting think out. the bit out the XX% to a kind XX had still was Hey, but cars, million terms to a XX given, X% at of is availability of within We X the months, cars we on get the some the and we're of rolling price feet No QX, of XX% the and Mike. you we've that volume guidance revenue X% We months-type standpoint, that left and growth, not part that out there probably that in year, we thing, real lingering in John. which XX% orders. couldn't a little impact we're because from commodity, get in This getting that that had we that look trading

get didn't QX. we get out out in that what in we'll think I that QX, So

John Babcock

that? transportation Just that Okay. and was logistics impacted that? And what

Michael Kinney

the hard time you're -- we a period, the quarter. you they Yes. at at time great week, what flop the the I -- get and were then corner, the mean, the any of end that's of the into cars of sometimes happened if and just and getting at really next when end having end it's

William Southern

have comments, as definitely just I so in did It reported We intake my we had became quarter, the we prepared -- more quarter. the strand of the the issue end for ship had up little order Yes. a at orders we SmartSide bit record than did. in to of buttoning things of

Operator

question line from the next Stephens. Our of Mark comes of Connolly

Mark Connelly

hear-- you Can

Michael Kinney

you are Mark, there?

Mark Connelly

you Sorry. Can hear me?

Michael Kinney

can We you. hear Yes.

Mark Connelly

Okay.

that. Sorry little? talk out. about business My Clearly for Can line Siding penetration market. market cut your an you improving a about

when but potential? sales, of grow will shift you to capture markets markets your down, And are those in repair slows are can Where versus how different you're construction? remodel think the greater strategy share? and market new-home versus much underpenetrated You housing terms

William Southern

in on the and we remodel focused market. very penetration further repair So are

That's single low there, in relatively major initiative We especially family. have share market our to compared a us. position to

just side. smaller applications what on for mention is growth We remodel think lot was also kind that. single-family housing -- we the our of biggest SmartSide. of and of other so slow, repair Mike the it that I continue be began quarter we encouraging of on is get I so We're seeing opportunity execute effort see I some as will than possibility area the this But focused to. resources and mean, on highest-focus a so specified to the -- we're markets, some and opportunity we additional is question, got marketing the there. That's to executing that. a that that -- spoke and SG&A there sales would call to our commercial-type to without more fruits this adding

of very We sales out an of we We are up underpenetrated in our that area opportunity. marketing and well OSB. that geared introduced there FlameBlock when see and as as product

also and have And are how be resources and using sell in through of so offering those successful promote channel our Siding we to there. the that FlameBlock success learned to

but market where So for -- well, area focus is large we're an those believe are and the of and underpenetrated. two of is a specified an area, us area remodel repair very also kind the we

Mark Connelly

helpful. very That's Great.

So back sustainably while, but just high recently, come of going very those little they kind OSB prices be a looked about a the in too bit. profitable extent high do think terms OSB your you for little market? OSB some down worry potential just for to more sustainable. incentive to customers Did to They've of to prices capacity? and competitors the How of for a sort you creating add

William Southern

of doesn't kind it has Well, so prices OSB kind to one in experienced, stay plywood, in think thing -- don't very the long in there especially is usually to it I I've competitive of way of those overall up have position to which the marketplace, tends any move relative affected relationship OSB.

in the even remains, over nature the cycle last I though, understand OSB question. for forever, sheathing don't the last up over mean, I pricing. of or So year, of it if marketplace think a alternatives, OSB in there very looking I peaks -- so competitive any substitution competitively a could the couple don't think been home, it's a of there's people this I over stayed think spikes, us it hurt couple might over of but start way a significant I

Operator

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

Ketan Mamtora

quantify earlier you know kind new building much res so of terms coming of exposure to solutions outdoor well, any to also repair you Brad, have versus the there I is just that? of of And as remodeling? to goes kind back and exposure question, your way kind how now, kind volumes your of for Mike, of right is it possible some to in that quantify

Michael Kinney

to in res -- the new of XX%. is Ketan, So kind the what the Siding XX%

res, think everybody which the new I it think if would -- majority compare is repair-remodel, as thinks of in what the it's diversification quarter overall XX%. well. be and whether XX% of segment kind whether I kind is kind new so sheds And that sheds provides Engineered res to you it of XX% And in a would XX% would -- I XX to So and XX%, the portfolio, whole be the does you that and to be new res, think from at Wood, the of to standpoint. so the OSB, that XX%, significantly it's the then in it's the also if the of that which the that across the a look is solutions, then outdoor, building

So all it's new not just residential.

Ketan Mamtora

Right.

the piece is new So about X/X? be remaining that sheds say, of So remaining of XX%, if piece, let's is, what Mike? and would X/X the what XX% biggest be the res would

Michael Kinney

think environment. I retail

Ketan Mamtora

I see. Got you.

Okay.

Michael Kinney

not some There specified markets, much. are but

Ketan Mamtora

it. And the I on kind Feb tentatively product? to smooth last Got any then plan you planning about XXXX? quarter when for of update talked recall you SmartSide launch

William Southern

Yes.

Let me that. update give on you an

we complete So -- durability call it and testing. all the, in-house weatherability testing with I'll are have testing, almost

are want really in making of siding the sure, the test standpoint, some means is from an which to. installing installed the product that we process homes, functions on We a as of

are product thereafter. February at orders now be planning shortly We to expect show taking the IBS to and in

So we'll SmartSide for orders taking be smooth I late QX, would strand. say

Ketan Mamtora

very Got helpful. it. That's

William Southern

Yes. made there. I'm question, Ketan. of proud very I Great -- the to just want we've progress

in looking last years, focus been of the couple, a with that's As at to and intense really really you show forward over showing a several for it builder we're know, the us focus February.

Ketan Mamtora

and big it. picture. helpful. question, then of And That's Got other one sort just is this

on affordability. outside QX Obviously, about other terms weather, from your this of back, know constraints. are labor step talked of general lot We've the there great, that you customers seen. these you just hearing you weather-related piece quarter demand with of wasn't housing one I going back, is housing and but we've the things issues also talked you in the step what if hurricanes, and If about were sort

out you So from as look XXXX? are customers what hearing you to your

William Southern

more at of a general Ketan, the next some but quarter, the on I -- was this statement, with where spent higher, of there, more next X% range say so encouraged. was past would little was modest customers, I growth and the kind prices for mean, of which instead guess I our looking builder were They actually I year, are, the share middle, expecting but by X% time for at sector, to year. do lot a for I pessimism to closer conversations. a I encouraged growth XX%, as customers, I based in been I've

generally So with see that mood quarter-to-quarter into or And year. ups customers there despite was downs continue their to business month-to-month, conservative, opportunity a the grow to happen across we next QX. interacted positive and they some in

Ketan Mamtora

price only helpful. OSB price about the is decline segment it. when presentation in I that, large a of but at would and between just sort and What That's quarter-over-quarter the X sorry, look Got that, drive at the difference slide, And the in when look XX%. in one last at question. I is sliding -- commodity XX%, segments declines I such Mike, OSB? the OSB the those within price the look just Siding decline cleanup

Michael Kinney

mix. a Ketan. completely different Yes, It's

regional if be have mix mix. We both of that's -- the mix, mix a to going different and out look you coming at that's coming Hayward a a of from and out Dawson, product from

of Western be all be Creek is and anything to going Central. to Hayward Dawson out going is Canadian North coming So production,

Operator

question comes Vertical next from the Research. Chip line of Dillon of Our

Chip Dillon

something that if if of didn't just XXXX. CapEx of missed the see look, that took just could terms looks you -- it's you I directional, ago, and you what affirm A, edging kind and that for unless Mike, down us and guys months CapEx give year, an B, in X Brad I doing know the you're in it early like guidance even

William Southern

is implementing versus are is going when I were Chip, XXXX Yes. projects really into It's we -- the all probably from cash timing really same about though we what we XXXX. come we through of essentially in down to -- mean, implementing. didn't on it's going it even said, really planning the

$XXX bit $XXX to going been going it's So saying just if if million, that's and XXXX. in XXXX, that little go a million, to be into lower, in $XX to million million lower we've we're $XX

first when as million now so million. about you $XXX look XXXX at significant at So difference, to our look is it the XXXX, $XXX same XXXX, no

Chip Dillon

those it have you actually It all there's don't try. like they when take lot well, When then give kind go be they of the responsibility. of people segment are be the things we doing have go look in to And things, a things will that you lines? seems to through that different at some of headcount? an me X will savings if some company. go going very at of bit A, the interesting when will process and wrong, corporate be line to And inner the the helpful. -- of idea sense that That's a to -- that you the the of describe of and all this makes hear us as all show it's it Okay. changing that -- And taking locations all you workings LPX, on up you're whatever or can you're you closing, in terms

Michael Kinney

Chip. Yes, No. Thanks.

our had them. the operations think, of three some well accounts as XX the of well functions those had accounts between accounting as and IT They receivable, maybe tax department. I those about our operations, locations, payable, as then three or our people, So XX as

So mostly of terms supporting in were they the functional functions.

into end X be the So separate leases from another going people -- we and costs actually cost moving of and you more out to we up overlap to having transition move probably XXXX, an leases one of in severance them incur of we had location, and getting as in will you're are Nashville. that. the that terms will location In those we

our will be end, the in So costs down.

kind We specifically stated of that externally have yet. not

have But here here a say Nashville people those I Nashville different locations. forward in in of to a we'll to versus that. people how publicly having people looking think and much nucleus the having people on probably a think there and few few in we we're about

the in Hayden having out very people Lake those I've will all the it, versus is having the to and -- Nashville important. similar where to It'll be to -- it's if mean, management think everything in of Portland line mid closest on from realized. traveled to think bit, be going here the -- we're in about I matrix those I and a terms benefits moving of you people So quite

William Southern

mind. add, don't let if just you me -- I Chip,

out One gains hiring, of worked later work the productivity years do and learnings that. you and we out find had the that during a instead somebody you it the of by downturn doing or find is and individual's that when leaves you for company have everybody sharing work, parse you maybe couple in efficiency gains ways one actually location,

definitely we it expectations, So I by -- cost by we consolidated savings improvements see into have this some those will our baked consolidating here, as find all all one having activities place. while efficiency in and productivity just

will So with get there share to of we it real, a number But as clarity continue and more it. it cost y'all around yet-to-be-discovered that. was on bit we'll be a

Chip Dillon

Okay.

Michael Kinney

an on Yes. would we when in be this system One should is from point us made other couldn't that that I on is SAP Chip. even not past say we the is enterprise realize we and done -- being were have the way our centralized.

couldn't we it onto have even we went So before done SAP.

Operator

comes question TD Steuart next line of Our Sean Securities. from the of

Sean Steuart

questions. couple A

How to On people, $X cost segments? now, $XX from offices a gets at about we're quarter I'm about the does to management we how thing think I forward? move if system, and to relocating quarterly the just $XX going should that the million of and falling potential savings those rest of we rate the guess million run And sense line down some corporate that? to a closing trend trying of should reallocated a excluding between get your million and expense

Michael Kinney

the wouldn't about will it's to No, I time, aspect too -- range. trending, it's range down, It's doing significantly going it yes, unless but we slightly think It going in aren't to of allocation that to not an million it, near going to the that million say at to way. unless $X it's planning say this point on trend it's go be term. significantly the be we we we be but wouldn't it down, not which going the to might -- change I But much be in change in $X probably I down. methodology, early Sean. allocation how have think

Sean Steuart

a pension any that this quarter. to on rationale? further front? follow-up, Okay. the catalyst and that we payment should going Mike, you us give Can forward big payments guys And for lump-sum had expect you

Michael Kinney

No.

we at so industries pension were I paying in and it it closer the when the across multiple point. we it made was multiple tax reduced funded, to And up bringing reform look tax those. fully to guarantee fees because being the if that it weren't looked funded. at -- being at the change think you look By at -- -- we that this When you sense. and fully benefit that law,

was standpoint, also and those IRR pre-funded thing that looked best essentially we it when do. that to And so And the at from it an fees. then eliminated

this point So we time. any that planned don't at of have more in

Operator

from of Davidson. Our of next comes Chercover Steven question the line

Steven Chercover

First financial of one, real the impact simple. rebuild? What Carthage press

Michael Kinney

that million, is typically believe, million. I million $XX $XX It's little I $XX over range. -- think and CapEx are those million, $XX a pressured but it's between builds in

Steven Chercover

XX down? days it's And

Michael Kinney

do Plus at shorter. and But I always yes. plan time. or this minus, to "budgeting," point that's mean, it trying we're what in the we're that's

Steven Chercover

your stance? order elements to it operational And order producing files secondly, just you stance fair as to as that when I'm has And wondering, strategic is financial contemplate just substantially. or your then Okay. and there your say simple evolved it other sounds are

William Southern

our to file. are producing We order

to want channel. service do the system, view own our and our build We within not is to normally to customers. not build Our we we do inventory want want within inventory

try we focus that day. demand. so our our we to And production And to customers' every match on

Steven Chercover

math $XX. X.X And the first the X.X did and or from million my last second one If me. at you right, one about $XX.XX the I repo, did shares so, at

So about opportunistic repo? half intrinsic second But second the of just if overshoot, on it value. the signal wondering so sends more of a you'll shares assessment can be a also strong I'm of bit

William Southern

deal good probably right? was $XX, Well, better at a if at deal $XX, it it's a

Steven Chercover

sense. That makes kind of

Operator

Tumazos from line comes Research. John question of next Our Tumazos of John Independent Very the

John Tumazos

does I'm random annual price, at contracts what so or that material probably XXX still costs. cause have would production Friday's Western think of just level supply above that read minimums at fixed floors to the lengths $XX we But do If level EBITDA And prices XXX? or if $XX last cost you're you of to that of contract? level? at competitors with has correct Canada, $XX price XXX the $XX there an or these a Are Are lengths what looking cost idle, statement random U.S. cuts? are continue have to you Southeasten that semi-fixed,

Michael Kinney

at what so back then length, October, and of it happens they're Well, over mean, to when whatever of order right think they files about is up go look look find I think or John, is random weeks. I When hits bottom are the bottom, longer down. October end kind now, you and now. look is, think look you'll waiting a where that at I and the the X for think into if that buyers you out what that X -- most I it slowed what happened back it is

So right regions And plus that range you've say that the would down now, minus, depending on are had I region. in you're X. or some --

the Some regions week And towards commentary are it week. look from a at lift lengths, plus a random of at if last you plus when -- from standpoint. you the look showed coming the the XX, X demand end

months. October over will talking was terms bit plays to it weather Brad see So that of how be we'll some about out in next the to of the seems out it's in and starting things little the -- a dry few

John Tumazos

to partly where at most rising into situation prices in if March X get April we're prices people and begin we the spring? these or on expect for December cuts? the X, So expectational, Is production sure

Michael Kinney

that, what of probably any would expectational seller from their any mind the enters right? standpoint a about definition but time. I of a in know buyer say all that's a given standpoint it's don't at into point and I I would say commodity, probably and

William Southern

they week feel they to And next price and these movement. week believe is the the next just want and not price a be is if lower, that -- is when believe going experience the to stocking that if on price is and going is people science, do business times to be the to want floor the take or buying I'll John. stocking a selling lot my up do much of as of that a Hey, floor position OSB emotion on either during down, as moving position add higher. emotion in especially take from there's they

prices trough, could way industry, you approach at, peak I the driven still and So I formula are swings, even we very they've as any much think standpoint look that you especially capacity, run. mean, we're a moved an moved as we have of or from as they emotion and of see that demand year. this if kind mathematical these are balanced as

all hard we're every So demand to on it's make day. focus our into -- do we customers' that's capacity our predict. is And and matching to very sure we can our and customers what production,

Operator

Mark Weintraub of question next Seaport from Our line comes of the Global.

Mark Weintraub

First just repair-remodel. on initiatives for Siding, laid you out your

You -- XX% the growth were flat appearance obviously, launching? also going you're the housing if you relatively -- of upside be talked and were do flat, back revenue achieve but think to relatively XX% product. still to to on about smooth you that of share If initiatives we're be be to it the hoping the can there's lion's

William Southern

an initial say as didn't I is I Mark, that decline. this long I -- would reaction. as housing stick do. would to

it we in decline offering about we make in would -- robust pretty that giving -- guidance been our the would continue evaluate statement starts, on garner, even to on and we're market a -- product predicted our I the saw would it. if But revenue. about would single-family, before to across a diversification segments we want Yes. we've I share I that in volume given think or actually

Mark Weintraub

you're projects, your situation of like views update that CapEx process. balance more at along look a bit on million fair $X $XXX further what of attractive wanting Maybe a on point as then I then the of in intrinsic $XX, cash at you'd having have to stock much your maybe past, out, and also $XX.XX, And the for stock's balance at you've of got order just us when In you. Thank attractive money value. could some on relative if and now sheet. almost think, the the undervalued even we the you kind although if to sheet you've is talked billion have, to about you where it's

William Southern

if answers so priorities our that me Well, see allocation through and capital go let your question.

do next we're rebuild As OSB going another press year. Mike to in mentioned,

the Minnesota. siding in a of kind there We mills next a running study now in have begun around siding. we've easy as a to site them that, conversion the just formalizing We that And have reminder Cook, OSB converting taking standpoint, done to ones the from the mill. and

Quebec. nonoperating a mill have We in

one. So siding well be mill be next sure financing as going capital have associated as substantially that to We the make want more adequate growth. next with -- the for could is to that potentially funding we

planning mill a to On the the up that mean, now, standpoint siding. on I working the started from we're before on siding on next it the is has mill pace beginning on we're be encouraging

to priorities. that. Entekra. we've And growth what to so and let's M&A organic adjacency we've those evaluate done similar then call to to done biggest with opportunities the are Barrier our what like We similar with continue The would

While know, so continue we Then those be to we're we are our use that. buying shares, active deserve have Mark, a going on We're can be where in the and back have, to could obviously, on where with that return buy we and shareholders But been that certainly value, modest, that of area, flex do but buyback LP. the dividend. reinstated we're and a capital we to we that's investment share that in future. of their focused. you understand we do some that with we on plan share depending initiative pricing, And

to to have as value higher shareholders. we be to cash, our create with long cushion the want You're remaining do in million actively speak capital pursuing right, than as for we that opportunities shareholder it's we the that, will and $XXX

Mark Weintraub

of I opportunities think very $XXX Okay. if and as would and/or potentially you deploy list got how share do to -- million do that's you've And attractive you repurchase which you potential a capital. opportunity price would potentially have attractive be I guess, deployed realistic you it's be the obviously together share competing put quickly about from -- -- Thank you. your that And perspective, for is all it mentioned you think appetite left there to remains that more? a

Michael Kinney

last obviously $XXX we a Then did two think, $XX the while have authorization. the bit And than little Mark, we had million a yet quarters, million still XX initiated $XXX so million a between the million, ago. on then we quite more $XX and we million, $XXX so left Well, I which quarter.

accelerate at think that to will at is to and that $XX better then that, we I look $XX the continue at or So opportunity $XX. obviously,

Mark Weintraub

very Okay. much, Thanks

William Southern

Mark, my board going part our asking, actively me our discussions will I viable is we think these feel But and around is you're our of share let say, a questions strength repurchase strategy balance the the be in forward, -- involved sheet. given of

board we'll So makes on around if in and we'll work be that this execute depending and sense, our will that, the the confident next we through cycle. of current one, then authorization, it where are supportive I'm

Operator

question of Paul comes from RBC Capital the line next Our Quinn from Markets.

Paul Quinn

available. you product great quite guidance you that a sure the Brad just Siding. put kept XX% XX%, question this at side when smooth have and to the you'd It's see that suspect revenue Mike, you I on but to in XXX% weren't guidance,

a of rough of forward? portion of give us to kind XX% going sort in the smooth-sided product. a could you that what if what growth significant wondering idea And is XX% the see Just you

William Southern

repair XX%,. you our XX% it for Yes. going we pencil to year regions geographic around having I initiative a where has as to and for have sharpen we've it into how portfolio. you to are key these as about want to next that I across the questions tell Paul, now is to of option and and repair when to we us, in really to stand remodel remodel. slowdown blocked your product, in need single-family on A that. the go in smooth, But -- have accelerate been we'll some on as it we an without launch And we overall and hindrance talked regions, is cycle in is really right growth, out past the begins sustain you have that because all us the has

So that. see rather an XX% as sustain an to enabler to that currently, we than to product the incremental being XX%

the market, back if give we out that us can to the year side. product see have and in changing and we on specific, a launched upper more be come and that Now

Paul Quinn

And four months. little additions on are you any got going helpful. supply-demand next three -- my in market on That's What XX expect place Are anything in these side, Okay. model and just one hearing on other that? we've you over the that mill OSB then over And Quebec? Forex year coming the restarts the well, in last mill new forward? hearing you do the tweaking

Michael Kinney

running. I'm sales a from honest guys, don't when ask -- I'll be To they Well, know we even a Forex we Paul, that not our hear it's you, standpoint with sure, even thing.

it running, -- isn't, not really and if is on the the you say, only are Norbord, talked call ones we're it sure other traded what mill So and else, to said it's on that is, then one. And barely hearing being from don't on I the but heard it's standpoint, anything, conference with if that that last -- hard about, mill Chambord I'm week. we're we sure their real so not a anything they

other enhancements, other I think anybody any or just So don't else. there's us continued other they're than productivity than mill-specific, whether that,

Paul Quinn

Okay.

and QX sounds out Creek we've have So QX at Do then it like which on takes idea downtime side, or we've conversion Dawson a month on the any maintenance 'XX? that of withdrawal X Carthage. got for plus the got months, you

Michael Kinney

we've is of even being of you Carthage, about but range. at plans, then kind into We in but XX in obviously, that wouldn't say this time, at goes QX. November look kind middle I Dawson we Maybe what from No. when right QX, down point our talked days that that of have mean, to QX, -- and

Paul Quinn

had. I thing last And Okay.

drop given product. Just substitute impressive, a that especially OSL volume pretty that I for that guess up, is is year-over-year, which the pick in lumber, XX%

rough Just there? of is OSB? you of wondering, have that kind whole mill, breakdown production OSL percentage any versus Do what

Michael Kinney

The the very is I you LSL, take for produced and actual increase if you it's the the majority to There's volume, to about part. a talk have little don't I'll but and then get of Brad, on value-add? I'll back being the want strategy there. not sure to volume OSB know, lot. the

William Southern

years, dealer number that of Paul, last LSL a to over our have which strategy, dealers adding -- has LSL is product. strategy been the we stocking the several in really

have get position, found if take you stocking the dealers, move. good does We dealers lumber that product a who

once force been gets that supported really and dealer distribution and selling good done has incenting growing been really and our we've it And that job exposure network, and once that, we've by exposed to the gets a around so product just used, it. And our has successful and marketing it increasing sales market. the our network, of

big So segment it's of a the to our of product I'm it's It's profitability. of that distributor and by of proud impactful execution a been scheme -- growth force in sales to LP, and our really impactful by dealer the the but been kind segment, very small the thing, strategy network.

Operator

Kinney further at showing no the handing any closing I'm time. I'm Mike call this remarks. for questions And over back to

Michael Kinney

questions. answer in And call. follow-up myself great. Nicole, as I all good any for are for and here And time think have and could the our Thank a always, that provide have thank that's Becky participating so to be you the day. questions, you we if replay would number, you,

Operator

conference Ladies you. available will XXXX X:XX Thank p.m. Time. replay gentlemen, on for X, be and Eastern at today, this November

may with XXX-XXX-XXXX of or the remote access at a dialing conference any replay XXXXXXX. by time ID You X-XXX-XXX-XXXX

For our international conclude today. participants, we ID is conference same that That ask dial please the you and XXX-XXX-XXXX, does conference XXXXXXX.

now a may have You disconnect. Everyone great day.

Louisiana-Pacific (LPX) 6 Nov 182018 Q3 Earnings call transcript