LPX - Earnings call transcript Q2 2020 | Louisiana-Pacific Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2020 Louisiana-Pacific Corporation Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I'd now like to hand the conference over to your host today, Mr. Investor of Director Howald, Relations. Aaron sir. Please, go ahead,

Aaron Howald

Alan our Thank Thank Southern, Chief us joining the and quarter well I'm and everyone. Aaron of Executive name financial joined you, and good second today as Financial as Officer. XXXX, Relations. Liz, LP's you of outlook. today Howald LP's Chief Haughie for My is for results morning, near-term Investor to I'm Director Louisiana-Pacific's discuss Brad by Officer;

we are As a done we the past, this have in webcast call. to hosting addition in simultaneous conference

can three slides which by than call non-GAAP have I will discussion. And www.investor.lpcorp.com. And website, to has morning's this presentation that Rather now, The some filing over We appendix by Form statements, about we necessary of morning. the our more incorporate some have financial and the a with to the be I X-K provided want have during and I will use materials turn accompanying The this made attached presentation the reconciliations those we during you herein to presentation supplemental call for supplemented detail. been X-K all forward-looking comments. reading accessed two materials, morning's at information. them of participants to morning and refer metrics I'll on with X-K additional we the reference. to our this this statements remind filed refer webcast, finally, supplemental Brad.

Brad Southern

call expected steps was face worsening preparing my morning. significant We But on spent last far, thank COVID are Aaron pleased to of fared that LP the from be the our over. position. all better this the than ago. three of but us many than bulk call. you were of of LP quarterly on scenarios am more last pandemic. so we liquidity might far and we time I effects the confident the discussed will I update pandemic and positive in uncertainty, a the were for just in us joining downside my have months morning, This weather taking the The Thanks, has discussing modeled

their the the mid-April, in approved per of finished quarter $XX After markets our has efficiency XXXX, with remarkable operating LP follow resiliency. LP we highest the this pattern, June. $X.XX serves the $XXX in share. prices rebounded cost million shown much know, products. of best May falling Demand value-added and second but but a announced morning The the QX production a cost flow, control, Board also products in and sign This show segment's we leave $X.XXX per OSB ending of I'll production in climbing earnings adjusted out EBITDA sharply recovered a that this its demonstrated bottoming sector has quarter, with and volatility. housing dividend sharply was quickly As and quarterly and May to quarterly for our of years. unit revenue June history cash through the second OSB slowing. in the share. of business achieved April, in costs and despite three since excellent lowest transformative details close mix richer the highs. quarterly delivering Siding Alan, million to no

safety, our agility. of COVID elements liquidity discussed that three the call, last were and response I the On

brief you update a me Let give each. on

at QX for employees significantly them impacted either most report our am all safety. operations and fully tested recovered few very facilities. have of not and positive Thankfully, to cases by COVID. our or are have I that importantly, in First pleased recovering LP were

follow to expert and keeping customers our to committed employees, continue vendor safe. partners guidance will We stay and

of toll human We are the of mindful pandemic. this

ones to loved Our we workers. thank first hearts and of go the all want and out responders medical who lost to have frontline those

liquidity, $XXX in $XXX million ended quarter of and QX of with generated cash the As cash LP flow operating million for on hand.

current demand were demand, of of the team's production of of response we was of near conditions, By and April, mid-March, May. we signs end our generation we prices discipline in A of to even LP's April's and this rapidly one-third better QX. significant capital cash and driver no accelerated, assuming were capacity. production back market trend both XXX% in functions. the result And in and agility June by our quarter segments expect Siding. the Given sudden slowing production facilities reversal and demonstrated management rates for curtailed recovery, the OSB as In seeing added operations, roughly leadership by corporate

strong adjust levels June is production robust. in remodel and costs. spot improved After low OSB prices year. to in is bright clearly still otherwise are allowed demand flat last activity uncertain us an and Housing were achieve production economy. drops in April starts and repair exceptionally and Our OEE housing with steep a

conversion production. our and exit retail with strand finished business product on our value on exclusively its talking these launch are QX execution the also in single-family the change these LP structural in segment. want on about are to higher-margin the focus Siding details The strategic the and a with the the showed export line. Prefinish This fiber away urban a to to innovation towards trends facility volatile expectations completed driving our exited spend facility fiber positions We and will how beyond. QX movement helping to more all share few well seeing line spending. cores Roaring reflected R&R minutes homes, Alan segment a increased about for in enhanced sale strategic strategy to the from positioned is grow transformation higher-margin product the in and growth ExpertFinish the River SmartSide and current shifts in from the trends. I capitalize of of strand SmartSide work business of few Eastern products. quarter. LP modeling This minutes and focus specific

several have past relationships and our marketing teams revitalize our our with quarters, the retail to sales customers. worked Over

awareness. As more and products LP brand a space result, higher have shelf

brand is one number on least SmartSide retailer's siding major searched big-box the LP one example For website. at

us As in This SmartSide construction it has as at and the R&R for installation. ExpertFinish through addresses LP in is QX, of Smooth than addition labor The for shows ExpertFinish implying of as demand more Siding well SmartSide trend these growth. our after far slowing painting order doubled, sales and volume been to both in retail distribution two channels has portfolio to very QX has jumped positioned and centers of for no home quarter the by products capture R&R constraints expectations. intake. the spending new time so ExpertFinish was Customer encouraging. recently a enhance remarkable our also exceeded launched share to our enabled of and our response segment. The customer saving our This Northeast. cost well sign

segment fiber products. With above products, partnerships the of volatility, customers pandemic-induced underlying demonstrated with growth the improved backdrop our exited with value delivered largest strategic lower the continued significantly and margin innovative new growth housing starts drove

their QX remain. risks Many is stronger are near-term or increasing. reopening outlook and reversing plans. cases uncertainties COVID-XX the While initially expected states than are and positive, slowing many was we

likely that I'm shown LP's have declarations of been the LP's proud far to said or and remains more XXXX non-essentiality time. That So this grit issued and of customers, new remainder operations in work-from-home employees no of create impacts orders COVID beyond. the resiliency potentially that a have but or that unprecedented volatility enormously is during possibility.

I to to details face control the employee effort well our what of flexibility Our we predict. Alan things extraordinary for as team's I the cannot agility teams more to for in this a on can't resolve. financial demonstrated and testament disciplined work as management every LP's creativity, results. turn thank these results of want are LP the we through as will that, With times. their we quarter

Alan Haughie

weeks low dramatically, quarter's rebounded and drop my with in on bookended single-family interesting a I was one continued falls and drop a housing, XX% by sharply on an the to housing April by Well Brad. month-over-month largest in was decreases June Thanks, larger a have increase. to since. in second and OSB were mildly. products starts and call even flat by scenario, in achieve It their recovering it concluded the EBITDA. in in with then of we a and the put a decade quarter ground of results bottomed in volumes last based this pattern end. double-digit by discussion Lengths' of OSB followed SmartSide before volumes LP's that from a OSB our quarter could XX% drop Random LP prices for by one-third Under highs sales most home sentiment in erratic mid-April were comments the similarly QX and Builder climb first potential confident demand suddenly falling prices. of the XX% that

capacity with surge scenario. to segment turned which in strategic by XXXX little third Peace better the a guidance, The and X% than with was represented fiber. XX% at was I'll in Siding average XX%. a production the softness it distributors. real our seemed Although lower retailers from single-family not in which quarter to but a decline LP's starts sales OSB year-over-year mill by OSB SmartSide by net was of very not demand price stronger Ultimately, just helped fact proved a volumes roughly depth offset of increased quarter to constitute million actual conservative $XX in down in decline XXXX. starts in the more XX%. housing quarter And didn't decline market second due Note in EWP than They and did Valley through demand both all. for but this of a SmartSide not The LP's explain much of XXXX our if XX% that OSB or the our for from course moment. grew number. housing OSB or our a more both little idled OSB modeled recovered X% quarter sharply in the exit XX% entirely The than as due for

and but exceptionally million quarter combination in at reduced came low-cost only double-digits, just. $XX for production in with So, EBITDA the SG&A, of still

the shows so, volatile. our that the strategic to volatility. Okay, we've presentation quarter that was second Slide of transformation seven robust that proved established

strand the trailing XX the over in months growth the single-family trailing Combining EBITDA year, strand but period. to $XX quarter-over-quarter. quarter For the and by to the our SmartSide flat, compared transformation Furthermore, efficiency were of X% X% was X% $XX SmartSide second starts impact XXth, this starts housing compared revenue growth savings, in housing of revenue million grew and year-to-date. single-family same sourcing quarter grew ended XX-month first June at million

of million in the favorable raw material the exclude we about market-driven avoidance decreases the doubt, price this of impacts For from $X measure quarter.

of end XX of last shows EBITDA the an still So, benefits of accounts. of XXXX. the and of the eight months, ahead loss transformation over Slide million at profit $XX summary $XXX achieve to we're pace million impact by

and expenses number The $X strategic quarter to While product the and fell mix, of from gross exit general, improved the to due OSB fiber second operational points result on X% in largely by by five efficiency, better year lower XX% and prior due cost three margin was million. quarter Selling, due for XXXX pricing to million points sales strand of the quarter results the year-over-year a focus costs. administrative in lower quarter for impacted than second profit eight to were $XXX our of support than points XX% The SmartSide ways. controls. and to increased infrastructure gross

$X divestiture million million. CanExel generated of gain of and in a $XX the First, cash modest

the been historic As exclude call, mentioned have CanExel. the on first the to of Siding results recast quarter segment

remaining we accelerate in equivalents to to Roaring resulted has production exceeded acceptance the replacements River ExpertFinish. converted have cease mill strand-based five and This in dedicate our to fully our customer the River their for And ExpertFinish. expectations. has our our conversion strand to third, fiber-based decision Roaring Second, of fiber

revenue in of and resulting was million income a taxes, share And we XXXX, million doubled $XX costs. adjusted As of shares waterfalls $XX inventory fewer and this share year-to-date for even a net shows higher $X the for the than million as difference incurred per year-over-year. of Siding per After written have second and segment the have EBITDA result, fiber earnings XXXX. assets, of fiber there changes interest XXXX was year-over-year XX by by nine to than and quarter than adjusting XX quarter million The earnings and was million result in buybacks for more and slides severance outstanding detailing the second OSB. were off paid $X.XX. $X.XX. in But XX than $X more and share Slide

sales and fiber in accelerated from Second by continued $XXX growth strategic The for quarter of million SmartSide million $XX with lower million the the of were prior $X $XX second sales by lower Siding million the The of CanExel. were resulting margin offset in EBITDA fiber. prior XX.X% of than from $X strand has margin XXXX exit of driven than million XX.X% year higher million XXXX. reclassification EBITDA $XX by segment increased to year quarter was in the Siding for percentages unaffected the

the reserve returns. Lastly, million $X for revenue Siding potential for includes a ExpertFinish

the response. understanding addressed is the have who During more support aesthetic the reflects pieces we customers handling of packaging shipping estimate a of even the and our cost reserve issue during of quarter, caused discovered our proud The I'm our damage quickly team issue our handling. some We gratified to and I'm this. impacted feedback the shown replacements by for of Siding swift the that inventory. way and and pending returns full from

million price for EBITDA largely than million prior of year increases. $XXX OSB efficiencies a and million relentless to of XX% million The is control. higher were operational volumes offset $XX OSB team's more year, cost including OSB million $XX Second due higher EBITDA of of leadership quarter was prices. drive $XX lower than million by prior sales $X $XX of remaining the for increased XX% result

EWP decrease sales million $XX factors. for $XX were attributable three below The year. to Second million, of quarter prior is

$XX saw a distributors quarter second of XX. as and inventory, joint in on cash, our in between less in working and the recover in $XXX was third, decreases in was draw price manufacturing the despite to the with interest million at million $X EBITDA quarter revolving a in Québec XXXX the strongly and that OSB comp; $XX and credit million $XXX the simply I-Joist government increased what million cash declaration deemed a not of through hurting manufacturing and time the reduced concessions, us difficult period second, for on resulted was our began demand including products cash major full First, cash line. to of EWP year-over-year province; essential venture a was million Predictably, payments flow. page as not line of spending $XX came goods in million $XXX working thus of remaining and million of volumes build hence Capital Siding materials. We with capital share did brings raw inventory plan. OSB spending Siding be reduction which resulting held the quarter in operating lion's to to flow finished the from capital transition

through million, our generated at the cash More repaid undrawn we'll million entire the million strategy. million return $XXX it. line maintain of cash line cash and from dividends During sale paid we've million of operations commitment allocation, liquidity remains excess strong $XXX execute comprising the of to to $XXX respect sustain insurance credit expanded the With and the investments made We also the over We quarter, once shareholders our put, and with and $XX our of generated we of corporate-owned of capital credit. to our the to generated quarter after in policy. life strategy $XX return CanExel cash $XXX million over shareholders ended assets to time XX% same. necessary of least an simply

beyond. at attempted signals third for to were of quarter our provide to On that we concerns, the not brings results quarter our us and XXXX's that plan XXXX, gets buy delay we reversing we back the decision, better second call, liquidity the given get announced potential we'll that did first and last closer any but to indication to the On quarter time. some any the which receiving shares our cash call, we market generation in outlook

stay we will And as double-digit is uncertain it how EBITDA it is ways, time is and economy on As before bearish. how long we've as three many good. the months but this said, get, it. except question was opposed bullish In is as not the now call, it we already delivered bad promised ask to once ago perhaps this to will

how So running and trends impacts. we're and business we'll monitoring communicate the

All growth offset still we the that, disruptions manufacturing commentary on might post current be challenges, Please quarter, caused compared doubt high we the sales. related lower under SmartSide to our are spending feel and last even July, circumstances, OSB is produce SmartSide Peace square strong Peace roughly through in I've idled of we preventative of we projection fiber roughly impact could will necessary mentioned quarter idling indications partly could Valley the quarter. the exceptionally of deferred single the more unit the to the materially and $XX no that, for and and currently are that of for channel remainder the more and offer rate be expect would the to that, third let-up given comparable fourth than close the quarter. of course to above in sell due third flat by all Through some thin feet year in out in in the XX% million customer we book production largely the more the of Valley. This strand in results already we than capital our in million quarter COVID With XXX by cost OSB, of running see COVID to was normal to of it will revenue third inventories midway digits better premature our for less than in quarter note travel quarter. year. we downtime projects. in $XX restrictions order resume with For utilization other million. the spend maintenance, second But our X% Factoring mills or demand. respect or XXXX,

the early OSB demand for and remarkable. the in projections the prices in the COVID, recovery extraordinary housing dire Given quarter volatility especially is second of

agility all worked to of dedication and praise want and employees, I products. as Brad our the costs prices, control to control LP produce cannot echo delivered and diligently so we While who they

want a caution. we impacts of So the future cautious about before, questions, we volatility The end I remain the past of market word given take COVID. the appears months, your five on of to strong. But very

at in prevent our need we'll our production is mind cannot to possibility. Though with the bear factors under to everything I'll over. and numbers. mills we to diligently customers areas that case We also That working mills, with our hand that, of several control and to safety COVID as interruptions we rising yet power cause employees COVID continued this manage OSB vendors are are in the said, preclude with to in highest priority. And the the of continue do LP's call our our

Operator

Thank you. Mamtora [Operator of question Capital. Instructions] comes Ketan BMO Our first from

Your line is open.

Ketan Mamtora

Brad, Good a Alan. morning, quarter. Congrats you. Thank good on

Brad Southern

Ketan. morning, Good

Ketan Mamtora

just First strong. question that maybe the remain to continues business, starting Siding on business you said

it, sort given, You've for outlook with of you have? how growth single-digits sort is Is QX. kind that, you of, to it little and a Can sort of, talk Is about color helpful. revenue be in trending will of, Any there July better? high relative that number? line that thoughts

Brad Southern

It's but with all at gave guidance morning. Alan to compared talking it's no the we've certainly little that weakness been line what or a in Yes. stronger, about this

Ketan Mamtora

expecting, seen R&R? Got have within we've then kind are about kind regions a rise are some of it. what market that doing new you talk if of And in versus been trends particularly, any of, can that, sort you south? cases end the in a how than the little given were better bit if that there resi And of

Brad Southern

Yes. Great question, Keith.

geography. do I'll then and first segment do me Let

as segment into Those retail through we had pools continued QX. standpoint, mentioned, So from really, pools really QX. have a we've a retail all strong

could deemed those to down in the put and fact of overlay there areas from progress. geographic people of restrictions, April and where had kind because able Right strong was speaking essential are out. to was building flow as shut particularly, no We large deemed speaking, measures up are opened the I were was a QX, were April. after limited late regions. paused areas U.S. trying things building geographically And states not most -- that In opening able March the to now of other -- places. as really local strengths good by maintain essential than or was to construction we back directly product say we as Everything and suffered you restrictive we with a micro obviously continue across I'm But strength figure the regions far would in place. seeing all were you -- distribution If where being with -- aware most where they to COVID. the of map affected in of Ketan around no

asked You -- both. actually remodel single a that probably family, and the in say strength versus I quarter. would in repair bit seen R&R And little stayed we've early the stronger about

R&R can to that contractors think where they jobs and solicit I try execute continue that. to So do

think strong retail us. the for also somewhat I that's so have attributable why pools been

was surprisingly quarter order Shed had that call next that earnings segment. strong the I We product a are final us. R&R had want into with someone And back or literally I you was there again. the else if because I'll question comment really there our know to the that after like I And customers think some it strong. have segment do clarify was make, the about come related then pretty gotten there. Ketan asked sourcing those contractors me file for said soft last this I week don't And

whatever very pulls -- until the in we've now after Shed date two of last again, So the quarter seen call segment. our good good

Ketan Mamtora

it. very side question Got one my Brad. then over. helpful, turn from That's And before it I

to On OSB allocation sort surge prices. net side, of, pretty only in times. is down the a leverage capital seen We've X.X big

of liquidity Just thinking a repurchases? looking preserving share at talk kind the about talked earlier. on of little – do sort kind share and of how about of side, But having you are about Alan kind think repurchase of about sort how particularly you

Alan Haughie

trends we and with prices, Alan. would market trends wouldn't at or the and quarter that we're right share it If third end fourth the assumption build OSB think overall Therefore these seeing reasonable we look performance It’s now the the would the of should on will markets current trends buybacks continue. through of cash looking the Ketan it? sufficient quarters first seem cash certainly. I Yes in that a the assumption. assume likely that through significant year continuing

So it simplistic rate the With through describe of half the shoulders this sort to of sort that. year depending second cash on as formula think on of – of use the the of of basically year. the generation I

six first the the months For $XX of say sort we're year plus of million.

So that would imply $XX right million calculation excess a now.

it Brad So in depends will the we flows. second flow said half as the on year. than really cash the And indications see are of cash all generation be quarter flows the bigger third second quarter cash

that horizon. on we're optimistic So return market to the is the the

Ketan Mamtora

Got turn it. back I’ll in the of over. it That’s helpful. luck very Good the year. half

Brad Southern

you. Thank

Alan Haughie

Thank Ketan. you,

Operator

you. Thank

from Our Bank John of Babcock question next of America. comes

open. is line Your

John Babcock

currently able the for And morning coming to well. how Good like for sales then been share OSB. would a match given sense dislocations Starting play and you've are demand seen production the we've much with that, that as get for products obviously thanks demand questions. your out, be how in well my in also I'd from taking of Siding. Smooth you And Siding helpful could if to

Brad Southern

balance Okay. to the John question Well for – supply – that balance just correct? was the Siding production matching clarify supply/demand is first demand –

John Babcock

in a sense we've Essentially time Siding. get keep Yes. to because had to And the I production you've demand well I seen with keeping want able right. that up has just in that demand a production matched for how been mean OSB. with That's hard

Brad Southern

understand. to the had the Siding. to than in we pull in that had in we're finished downtime with of file stretched been keep built we quicker QX strengthened came the When order that it. I off fortunately. goods April, inventory Yes up file we upon. Got we some that able order We thought We've took

in But order that beyond Siding. in schedules it keep at no – – OSB see ability our the we've with order probably little we out delivery right stretching so to our is to Siding that and produce all are had intent But to file bit on the you'll mills numbers. lengthened our now only file. it's running a running see Siding production You'll guess I full

John Babcock

coming your And Okay. be on point? you to sales products much provide from any Smooth might able are color this at the how

Brad Southern

it's Yes. – its still second It's front of John. I be percentages still don't me getting placement for in into that have single-digit but that still year. going to product we're

John Babcock

And the volumes OSB lot. you maybe drivers then that products value-added trended and more were there the a and for a value-added about of But could noticed have market I how that's just volumes Thanks exposure. bit Okay. also also end talk recently? because down

Alan Haughie

Yes.

part of did So TechShield. drop is the manufacture Valley because Peace some

essentially So we when the increased time bit this pressure of a of Peace Peace close that commodity of to very commodity downward right But the the basically year. idle little last a decision that high well little some or prices Valley the Valley now a – put builders bit made where products we are do on making trade-off.

happily $XXX, price they're buy OSB's commodity $XXX, TechShield's and they'll that when very rises $XXX TechShield. to You little less willing could to example a But XXXX-square – as premium. by high that then if foot of way pay for

the just a mix it of bit little factor shift is little So a on. a of bit modest. a does cause But that that drag puts

Brad Southern

these repricing make to inventory. just the becomes markets, for mentioning have they contractors priority I and that that volume easiest follow our it's builder saying we on from for is commodity We de-emphasis still But supporting – very by them. it to marketing a is our no Alan's – of a John, want mean sure sometimes of are way strategy. our those standpoint. volatile just products not But a I as things part in these enough

can we're still their on because order the pattern volatility. long-term But and So laser-focused increasing bit a but our little of a value-add perspective, change we from -- percentages.

John Babcock

wondering year. And if on obviously what then the the to want thoughts bit on to would still OSB, curtailed was was I a get industry decent very outed you. really also this Thank your Okay. is capacity And I in back, get -- market take earlier it like just uncertain.

And to might kind want of that so, ultimately on I what back? capacity, get come your cause to thoughts

Brad Southern

the make system. we around idled me -- in decision speak one won't mill have our let we'll how I So that. to,

not As as we've see price-driven decision. a decision, mentioned we demand-driven it before, a

end If to starts year. Because starts, housing you demand at believe going imbalances. we up It's much where capacity time taken this housing will production look year, out. at pretty when last was level this be to that

Peace so believe not up horizon we we on plan X.XX% -- to don't starts, or us And and X.XX% see, that sustainable. bring that's the until see we Valley housing do

are price a for basing we And -- on Peace evidence a outlook. we're capacity it's So on Valley of demand, not needing underlying focused restart. the it

John Babcock

Understood. Thank you.

Operator

Thank you.

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

open. Your line is

Unidentified Analyst

on This for Paul. is Marcus actually

Brad Southern

Marcus. Hi,

Unidentified Analyst

they've quite a of of sustainability rally? been run current what markets, ball. here. on don't see kind OSB And I crystal have you did you a On the But a to know of bit

Brad Southern

Building it's industry is is no full as as And it. to I out. the across strong there Well, the in to August. I pretty flowing long reason really product is as close think, for the that. for We're demand there's imagine a softening be would running into U.S. construction,

think where pricing kind of obviously I is is highs. today record

abatement the our softening to price get it's season. we on over in expect soon file see we in that's given So any at the not is when I not of and typically demand But But think our to weakness at. Thanksgiving soon some the during we're and to seeing anytime time, months. horizon, it that softening to few lead Year's, where something just New we're file. next But order least direction being immediate downward in us order anytime typically

Unidentified Analyst

in adequately on bit right to Siding maybe And QX. had supply May. maybe put a take Or of the nice your they another been business, able there it's way products chain, rebound expectations, Have the stocked your customers helpful. in all now? All right. And did secure you a That's is versus then need? the downtime

Brad Southern

chain of the inventories chain taking April, in anticipation pulled supply also of we were as down, the downtime The -- in supply softening demand.

Ketan's delivery been inventories to more I to rebuild And as about I our a on and tight be order result. to a that's back it to challenge. a our products them their And up, able to has Sidings, so inventory was for provide been with why it think demand spoke customers as ramp our schedule the level And question, then from lengthening mills in has normal enough our ability we their and also standpoint. meet

Unidentified Analyst

business headwinds in market next right. makes And months? over are what opportunities some a the seeing the you the XX are to of And for sense. today? the EWP That All has What XX few here. faced business then, the

Brad Southern

in EWP really our is file, really, too. strong Actually order

seeing we're we a a And nice there. of OSB of demand making pickup use I-Joist. as just So and lumber, reminder, the in though

cost manufacturing, up I-Joist into is the LVL. material raw way the too is the really by for near-cost So

as a seeing that of I near-term good from in material the the but we've scenario and that margin to squeezes a result the so enjoying be there's increases see And going outlook price been OSB a raw business demand for on side.

Unidentified Analyst

right. Best the all had. I of quarter. All luck in That’s

Brad Southern

All Thanks. right.

Operator

you. Thank

Connelly is question from Mark Stephens of Inc. Our next

is open. Your line

John Rider

Hey, good morning. Mark. Rider for This is John on

you. question for First

labor been before lot hearing seen probably certainly Have interest issues have and of about coming you a COVID more for through We Entekra? more builders. started, a bit an is now for issue

Brad Southern

Yes.

was file that while in evaporated a of close a file the are from quarters order next -- districts Northern we couple us As standpoint. that Area much And California from good market seen We've inquiries you seeing Bay start-up a down. accrue. as volumes and really did perspective -- for didn't order those hurt that pretty as good QX noticed play

John Rider

the more all? you And good thinking geographies here. as had then of changed Thank as well about Okay. has hoped? That's gone color. second the And you're COVID SmartSide you. one Has way distribution rollout at in

Brad Southern

again? little -- repeat The garbled was Would audio our bit. question you a the

John Rider

Yeah.

geographies rollout way Has the all? to the of And at as hoped? distribution as SmartSide you more had about gone you've that. changed COVID thought Sorry about has well

Brad Southern

a gets changed thinking the instance COVID Obviously retail strong. as bank demand, quarter-to-quarter period emphasis distribution. our six-month can over really not about for the change has

we had the been waking by getting then did into for two-step and to to while, we our key ExpertFinish able and the retail was a continues But a exception our product. we launch. the really where be pull to have though second, So region flex Northeast Prefinished structure distribution in here there's have I And year. is an a to And in be but last rollout. in, upgrade new product -- really really, distribution what Smooth like facilitated which which is it we've to a for our then good access -- I but to really line facilitated speak will our market, to R&R construction been like I has

year key supplier historically So really to made the Northeast a we're distribution, that those us bring think attractive and glad been be I us so more say has two and growing it's going ExpertFinish we've into launches in distribution Smooth to to last year in this able region weak. much that been Northeast higher we've on to quality some

John Rider

you Thank very Great. much.

Operator

Thank you.

next comes Sean TD question of from Our Securities. Steuart

open. is line Your

Sean Steuart

of exclusively restart. to demand like A issue could decision regards BC to there it with sounds Valley, any fiber availability Good that there is Thanks. couple On decision that like well? outlook start potential or Is in a morning. Peace with out housing the questions. affect related your as

Brad Southern

sure. been for BC Peace the it a us a but in an I fiber mean, And is been at never There availability is supply has it's -- issue. constraint. constraint, pricing

mill, positioning we be the would this So we at that relative restart mean to do. would when that analysis I competitive look a of

we have need we make the starting that return a get getting sure that capital. We on justify margins and to can up to

we that in we've is something it startup. are loan consider a fiber mills a of the been per that's So be that that obstacle of would and to it potential cost obstacle a say not a to margins restart the we operating factor would would But during a mill the restart all significant nor fiber contemplate I is now But when supply right as be a factor restart. significant decision. would dealt

Sean Steuart

that. for Thanks Okay.

was The decline relative your on percentage. quarter sales trend a SG&A with this question to There SG&A. is positive in base second

few a back? the the spending a and concerns on trying progress the guess of SG&A give comments. can initial just sustainability touched Any coming around I pandemic factors recurrence been gauge on you that You to guidance cuts have we related that of spend of in the I'm prepared could might that to of how see it much side?

Brad Southern

Sean, that's COVID the from buckets. rational at working office, a reduction and home. staff We also good to national still we question. order And and let around we're where me talk some relative the about did here three demand things it velocity. predominantly expectations some did But in

some this at being positions support we had underutilized And the here just of so, point. are

-- We also the new had some some these open open positions and positions.

And in positions some the would had put in in existing budget place, prior still open which for at in will that have we while, next place be is quarters. least also probably a a We season. been and place hiring freeze in

expense staff our all of is result. down So, COVID. a as reduction way given supporting. that People we've functional Obviously had way kind travel is some cost down

come Second support, reduction XX with lot be which open in continue from a very come is where customers they from hands-on us and going sales training time looking our that salespeople -- volume lot get a customers. a do session a and things enforced given a in bucket knowledge that a of That's we back the did SG&A support We've area. for is as couldn't locations. other training sales we're moved front of manning at XX of to been very could will hands-on, training things force. We sales I sales see our and -- dealer were in fact situation. product our our was at type do having need or Again, which problematic XX to and online, we to more contractors especially efficient that distributor

hand of bit support marketing and out reset out product serious obviously knowledge marketing. folks. us there two would literature. or especially a we over say we've changed the I and took online Siding, to And three we've I environment been a type the where little printing has pretty has of our at area it And we're again, not look in large emphasized of understanding did that years. mean past third that had where spend, once pieces to The increases a

So in as rest to But, that lot we customers, contact a our but in customers and time just emphasize more way fit face-to-face to presence for. just on were one working it think spend to a stuff the the will see back much longer we back I but through and know the more, had will you spend access with to that the will on we say been the I working efficient have were I answer I and a previously. felt our that -- probably needed we some of adjustment year, environment and restrictions carry enthusiastically online think return with come just we there's want to looking like this was to was it it. believe an marketing come of we given that's

around of the else the want point our Anything more requires – So there. let ExpertFinish samples. excludes one that product. lot put it we launch. me see All to launch, People make a support pre-finished

You experience want to the product, touch product close. the up

ours and a a we robustly activities. our So is then marketing there has see that hard put to convince sale to do hard continue siding that a -- supported on just their than in launch support house, we contractor typically the person there. a we'll level we that have in process home, of that be most trying siding requires to to is of want And of and sales opportunity such and an a because other so, higher reality

Sean Steuart

tremendous a it. Thanks detail. Appreciate very That’s much.

Brad Southern

Probably, too much.

that. about Sorry

Operator

Weintraub from question Global. next Mark with comes Our Seaport

open. line Your is

Mark Weintraub

shouldn't $XXX in from I moving understanding unprecedented pricing impacts sure With to some stayed we and could we're I'm the hoping reasons OSB that there mix assume North potentially a pencil bit just in are here, prices $XXX if just was here going regions. you you. get one and/or shouldn't in other times in Because higher in pricing of than little lags? manner Central from -- cause Thank factors in in an maybe at would just the help length? by you if if $XXX it see now right maybe average. the we of deviate look change biggest than quarter length July what higher square what the like could it's just walk even the But volume? some XXXX instance you that if random And the through feet to it's second are we for more random per us average price of

Brad Southern

a mind speak talk correct me then things this two to Let Alan me. lot. We And about do are for that please me. of – top

mind of or keep those type priced a about contract talking rising is volume we're XX% Random XX% OSB week situation. the two when a volume are contracts prior market, all our some of first in our that depending So ago, of But on situations just is which in contract Lengths. to

oil the And So prices as standpoint from sometimes Random the increase. prices on is contract -- to on mix get we're going quickly then our noticeable or as aren't rising adders as prices. commodity especially our pricing volume flooring the thing other have reported a flooring lag will

issue. I a primarily that's know I for keep those sync. to obviously market we things think world try order reporting that our file and open

contract sometimes in shows Random -- there relative see the flooring lags to For the have back commodity which volume. up pricing our to pricing we'll some reason will

So negatively guess there's Random these a nuances way can us relative I their in data impact reports. to the rising market. It gathers and

a on it's part a it So of in definitely every I've we rising cause with work And quickly in -- market. as Random. don't lag I've as it been get don't as will a calls cause it almost rising could reported -- in all Mark as realization it been that -- we market. we've just these since

Mark Weintraub

because is with pricing files? in up. of sure But -- to of get going just normal gotten by I've far had other I that a are sense the just maybe see maybe the guess of folks, we That all I've so instead conversations in far still out the going not it'll are your a started order you're long longer it's now. up the lags they some be been which August how out middle And currently? would it now negative that way order are files way here I'm means your how right show than

Brad Southern

we disciplined like into selling to X- -- But pricing X-week to a in volume we just be file. and especially longer. the to -- want every want go it's tempting stay We try hard work market this sometimes we order to really we have -- week. a Mark to

And a X-week to all so to stuck and do plan X to have that. file we this order to through continue

Mark Weintraub

spot maybe And you I putting little Great. last if thing bit. a I'm on the Okay. can

EBITDA would in relatively we've is higher you your in that what of Siding reason given wouldn't and quarter? be significance, seen see saw that quarter any we OSB of the comfortably given volume we've there double second softening in in comments any in that seen your for in months the what near don't given the pricing Given see plus couple next what more reason one volumes term the

Alan Haughie

to Comfortably in here, double push introduced I your that you mentally can is that. you're the accept I like own reasonable trying Mark range question. to us that that. all The caveats given

Mark Weintraub

Okay. you. Thank

Operator

Thank you.

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

Steve Chercover

in Or fiber wood permanently Good question you Thanks. Peace do kind market? morning. a order my the down to to you're Sean Steuart of Valley, reduce get did in to province on comfortable, have I negotiate level pricing. have pricing wood order competing a the the the of that cost? the the or to buyers with crown I mean left on scooped question has but any of

Brad Southern

wood the Picking good cost Valley Peace The question, Yes. is Steve? up...

Alan. Haughie

Yes.

Brad Southern

little so in are factual. It's really crown just it's is that up crown we perspective, -- mind the But your comments license on, a from keep harvest. a Yes so where picking look a get where sometimes sawtimber. from in I And that the of we emphasis a of is of pulpwood, it's can kind on stars. user being mean four standpoint. rounding those Us value that's lost

as there's So much. not

it right. down. closer Peace while to there's So only have to from not in delivery operate. is negotiate we've price prices Canada a or is of also it go we cost with get on to to been The to there which make the all sure wood providential strategy at sourcing the standpoint agreements a there's through pressure relief provincial governments mill in stumpage the But in where employed Valley. in controlled and you're or work your by the not increase much as crown you're those modified of way opportunity and lot But draw

Steven Chercover

with a the mill I should you associated with the community interest wanting wood have Well it. market, and running think have below to fair for to that taxes they provide in that vested without

I conditions a market to allow So get well the it had quick hopefully that question... you also reopen.

Brad Southern

for not -- the want leave call operating shutting -- nor for not me so issue it is the saying that margin clear. but sure, let Peace it This your want remote well with be is in be The that it's I And plant the down, cost to It it an to us look issues Valley reason just the the margin. from the just you reason make clear. really restarting without served best markets U.S. at where's I for obviously again. western to don't just issue

cost it is that issue the that West uncompetitive system really to down of because shut competitive we least our was or Coast. plant the delivery just the which that makes of the in So why

to that. clarify just So

Steven Chercover

you're do And be in I able to Yes. to lifetime. anything there's doubt that to our going change

Brad Southern

yes. Exactly

Steven Chercover

Plate tectonics is slow.

quick sawtimber on question markets. So

COVID and doing to Brazil operations a necessarily I my it's that's market. they're being better real So best hotspot recognize big despite a aren't it's -- year-over-year and the that of the there but knowledge

also you So you're there? is that are What's enjoying simply down price? Or accessing operating there Are on improvements export there? markets? going

Brad Southern

of three. little all a So

So did we last there down we're far year a mill start-up have on. that along

got cost looking year a at standpoint, you're us prior some are to comps -- So numbers. from the some comparative we've that when favorable

position. And to say on in the good arose. start operate finally in at of export would the export We've business been economy Brazilian as Secondly, economies. because then there has seeing to stand there down has and headwinds the I both the been really good still been economy that but the continue our I the our price and we ability has been export able pricing helpful not Chilean in later has we very as to resilient would constrained U.S. volume both quarter, been have say did and a to mills

of of those being got as price we've margin the is as recover. markets result improvement volume result some So on a I'm assuming to manufacturers a attractive U.S. on less U.S. export price-related --

Steven Chercover

Terrific.

my Thanks call stay and Okay. taking safe. for

Brad Southern

you. Thank

Operator

Thank you.

question Wilde Mark comes of Bank from Our of Montreal. next

is line open. Your

Mark Wilde

Brad. Hi,

hope a Just still standpoint you domestic? of business. Brazilian Or slower that export? the couple adoption building I mill a Brazilian that Is that little that One a of is Brazilian been than primarily from on would guys follow-ons. OSB for. think code has

Brad Southern

export a but me, don't in I'm -- Yes. but steel. to going have say mill it's XX% XX% it's high to those high depending Yes. as front export of numbers I on Mark, for

Mark Wilde

Okay. -- countries And is just then - have hard how with just by is both Brazil domestic been how Chile and pretty COVID? hit both demand in

Alan Haughie

Chile. actually demand in quarter. It circumstances Then second is volume under was. was Siding the the more it product LPSA as selling XX% Pretty well surprising helped actually Domestic and year-over-year. good the up in over producing was up the significantly Chile rather in like that and that

Mark Wilde

of out. And like Siding then how other it in or one had Okay. finish, products just talked an the you some other rolling not the a structural current of volume but about you thinking also just bit possible that one. like that extension only of on expert And is Is to get rolling? I'm little initiatives of like update the terms products

Brad Southern

say, at in, would months or Well, I ExpertFinish but by customer our received expectations base. a very for few is above it's well

year At the end of be. adding is to we we where one much where -- expected are it that. Our Smooth SKUs pretty product have we to

So we've have panel now Smooth a other there. done we SKU additions that and offering in

the continues FlameBlock the side, On OSB good had really product grow. to

up We which is app on lengths which County, we down -- We've production the is at in as mill our that facility weather OSB. make immensely. the XX the foot, weather hands portfolio Alabama, a WeatherLogic Clark built can ramped a long wrap are

product portfolio that out in roof will standpoint for product that it's critical offering our shape from weather to portfolio. working are a have resistant OSB. distribution And that a really on We

is out fencing two show of launch last WeatherLogic then the And round kind years mode the a small that at and So in still portfolio. our you're from saw very base. as the we product parts you finally, if

But a off that on basis distributor seeing well. We really, a growth we good It's Infinity would so that really growth than taken percentage bit like some are rates can pay we zero base us longer found of product are way percentage right am beginning kind And But we're is little non-traditional for portfolio. to of off. getting I really have and acceptance high. of a it's be -- a as of know that but we're as from seeing of liked, our have the that product proud in distribution we now. of all

I launch all board are So market's over of products. would little we depending say these on where the bit on a phase the

some Some get accepted longer quicker like ExpertFinish take like Fencing.

Okay.

a is to highlight. product. the this. Smooth do it and Work a So FlameBlock on to we ExpertFinish let Smooth to is is about WeatherLogic want me summarize logic on do where Fencing highlight. be. work

Mark Wilde

in just Okay. think what And Siding would bigger years about four the three see you that pie? to a segment a had be Brad piece if lift able we discernible like or we should as ExpertFinish, becomes entire we think bigger things of margin and the

Brad Southern

Weather product. very market ExpertFinish is high Yes. -- a

Mark Wilde

All Okay. it for I’ll right. turn Good luck over. half. second

Brad Southern

Thanks.

Alan Haughie

you. Thank

Operator

you. [Operator Mamtora Our Instructions] Ketan from comes Thank question Capital. of next BMO

Your line is open.

Ketan Mamtora

you. Thank

on of think capital sort kind understand increase you bringing at other what question additional investment how existing to of just was those two? curious modest sort mean, Valley? do I just to of on of existing Peace have kind mills increase take? the Just OSB or room capacity? I capacity how kind Brad, of about the of that trying production much one mills OSB sort versus to investment of capacity. you could I'm your of Kind do

Brad Southern

Yes. shifting at shifting. full wasn't Well we to QX full mill only did was Maniwaki. this add That running -- -- that at latter we did go the

during of points four press near-term two of we which over the runs ops last in up And two well after good One our refurbishing program to done we we're in -- -- years is there's couple moving two OEE. or And room there rest an go really good that where was good and now that's years then increase that have still this the our of made in opportunities dryer progress a then the there. three But showing of upgrades talked our we our mills. it's back still OSB. comes into now it though OEE we've And the percentage the really, capacity upgrade capital in bunch opportunity other extensive to opportunities. So of have to the numbers. on about

in capital -- the it working not OSB And we as particular because in opportunities opportunity on paper and So LP it's be that hard in there capacity has well it in going the I to the work also early And robust projects be capital. capital call OEE of industry single-digit always going to side we're business that an that today. been have certainly the years that's called that is and we we creak. capacity the last OEE creak -- over cheapest the was should have of use for it available think management is seeing to our when to I number program I'm micro has OSB keeping creak exists increases to up. are increase But what capacity few get throughput. these And the we

a is part around And so plan of our our improving getting more of out key those of OSB. margins assets

Ketan Mamtora

in decide that? it. And it's Siding thought the kind whether project Cook? there one to any the may Got That's then on of if And or helpful. have process you the that the on brownfield do side Brad, updated next Val-d'Or when have around you is

Brad Southern

Yes.

view So the based growth is critical of on to as I and timing. Siding mix our input very mentioned current also

instance, of of have right way business the because the and panel we a we capacity For in lot Dawson Swan. now configure

will -- So would I today and plenty approval which next to and and be middle depending could make where mix we'd is ExpertFinish. where identifying getting But of -- that the have decision the and location to -- year new the would But we say given willing lap mid- to trim operating capacity that be to have sure mix announcing based it can necessary the but seeking stay year we again timing. by middle today, the file on or timing? kind we this be approval needed making Board are then XXXX want similar somewhat probably the Board around next of publicly that late means we and looking be next mix that for we which meeting one influence

Ketan Mamtora

to Brad it. is which mill more Got producing better then suited And lap?

Brad Southern

options two mill. light be the those would Between Val-d'Or mentioned better you that

Ketan Mamtora

That's half it the for of it. turn very over. Good the I'll luck Got year. helpful.

Sorry ahead. go

Brad Southern

That's Well lap would a be it's trim. for the is kind just is siding of has it press and in reason -- and Val-d'Or the reason XX-foot for which dialed optimal there.

Ketan Mamtora

very Got it. you much. very That’s helpful. Thank

Brad Southern

Thanks.

Operator

showing the over any turn I'd Thank to further time. you. call no like I'm Mr. back at this Haughie to for questions closing remarks.

Aaron Howald

QX everyone. Thank look This with Louisiana-Pacific. discuss the to Thanks again forward our Stay everyone. November in for and you concludes Okay. you call to safe second sometime quarter speaking we'll earnings results.

Operator

today's a Ladies and gentlemen, does conference. Thank And this participating. you for conclude great have day.

Louisiana-Pacific (LPX) 4 Aug 202020 Q2 Earnings call transcript