LPX - Earnings call transcript Q1 2021 | Louisiana-Pacific Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2021 Louisiana-Pacific Corporation Earnings Release Conference Call. [Operator Instructions] Please be advised today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker host, Mr. Aaron Howald, Director of Investor Relations. Please go ahead, sir.

Aaron Howald

operator. you, Thank everyone. morning, And good Thank you for as discuss results today QX joining first quarter us the well to of outlook. LP’s for XXXX our as Relations. I'm My Director Howald, is and name of Aaron Investor LP's Officer; I'm joined this Haughie, by Brad Financial and Chief Officer. Southern, Chief Alan LP's morning Executive

this morning's presentation are we to We to will a discussion. we and refer webcast simultaneous call hosting this which have addition during in conference uploaded a

materials X-K of some accompanying these I'll available those also contains reading We Brad. X of some the notices non-GAAP you are our statements, necessary I additional and investor also website, on appendix and financial statements will further call those the X-K with presentation now relations All Rather this And filing. filed LP’s supplemental morning and this information. X materials. refer than presentation that detail are www.investor.lpcorp.com. The Slides metrics. to forward-looking morning’s of our over the to turn reconciliations supplemented by provide

Brad Southern

sales the prices quarter you and more to XXXX. that strong a has morning segment American SmartSide for discuss ExpertFinish strength first total for Smooth of year Thanks volumes last nearly remodeling million. an South home with of gentlemen. for million. EBITDA quarter than in And LP’s LP. had with first SmartSide $XX $XXX to cashflow. to doubled QX extraordinary for the building in versus generated QX decline times results X% quarter than LP’s net outstanding ongoing segment continued with by doubled products more grew XX% And OSB those last three quarter and to OSB us than very innovative year. for customer and throughout LP’s also volume. result by reaching sales driven resulting XX% of everyone. LP’s joining of continued EBITDA all demand more products Robust Good thank

that all sales, in plan Last EBITDA we slated in quarterly $X and $XXX main As in Columbia restart million St. from the Valley cashflow Houlton result, our our The generated and which expansion OSB Fort to SmartSide. billion operating of decided. mill mill announced Sagola integrated and convert share, in and records. in Peace $XXX a John, included converting LSL capacity LPX OSB of per are million OSB phased, $X.X plans our a in quarter, and Michigan British earned mill

those access despite difficulties projects. Let on me is COVID. schedule, expected Houlton underway on presented some by briefly contractor and travel update and you conversion with

SmartSide now than at begin production of year less to Holton a QX from next expect We in year. late

and regional and about the We these are investments suppliers enthusiastic expansion Holton by represent are excited stakeholders. responses that the and we in from community capacity gratified local

in an conversion to impediments condition XXXX. innovate, with the shortages employees Process again, and OSB aggressive SmartSide look stretch. When execute of welcome we of expansion on exclusively, normal quarter, since mills use existing Given them have exploring in markets want plan MDI by to the quite portfolio. growth episode it is challenges the uses Peace essentially and We're become we growth. production resonant demand, allocate supply, projects the restart. I also compliment excellent the to using by to of capacity QX. idled pre-deciding forward in levels expand We're prioritizing going OSB. efficient we the Valley We're and supplies to spoke scarce Without in able are integrated of capacity small back. a achieve evaluating another facilities, And former improved and availability maintained production significantly we mill strength the options as anticipate that are OSB used siding can of strategic we to having accelerate and the levels ahead MDI. resuming an and but capture mill. OSB in LP’s to well SmartSide summer Sagola. Last runway has number the for has back of pre-finishing deciding. has also quarter in conversion long capacity. subsequent and/or of to resume expansion growing of pleased about OSB were has share, returning alternate SmartSide SmartSide have as MDI team add well. as the who of kept to struggle also to This we we highlighted addressable once to manufacturer resins. MDI, presented OSB are constrained, of MDI equipment the value glad we I They by early minimal outstanding

acetate While quarter. to supply expect we acetate-based TechShield, has of to situation the normal by and radiant production has the improving MDU of levels a production approved supply vinyl LP’s The shortage is be of quarter. of sheathing end global decreased vinyl forced product in second adhesives TechShield back the the barrier

can doing and And OSP issues subsides capacity and network and are mitigate environment are and present to challenges through likely in everything impact broader safely, logistics We're as supply such we these economy going forward. quickly tight optimization. to LP’s customers, in particularly to SmartSide the the an adding difficulties with decremented North possible. creates and strategic recognize availability However, strong as as COVID this We rebounds, sourcing America demand. chain the of we disruptions efficiently

am I a after announce returning working in of to of LP home. national from phases than headquarters that happy our year Finally, the is initial more to

to gratified feasible. as it was of mill employees, want getting have back LP’s I are as been many as we for all acknowledge from normal, working well majority home the to all customers While not

U.S. Brazil. in and exercise the COVID. to supply products appropriate all impacts had intense to a financial and and of exceptionally renovate for and demand vaccinated soon LP first outlook all not keeping and to get encourage outlook challenges in want remain discussion are for LP build the SmartSide care our And as to on lag over remarkable and to customer, and but resulting markets need response results strong are mill to the is all detailed our call woods Chile, While in exercised Canada by the precautions of quarter on COVID-XX and you QX. yet. The diligence possible. I employees LP’s near-term pandemic continue will for ongoing they of vaccines minimize our widely out LP’s I improving, QX as rates With and they and we them turn vaccination team not the call more OSB, for that Alan very positive. helping in homes. operational housing from available Situation continue are of

Alan Haughie

most Slide just OSB growth the times Brad. SmartSide including last results the much increased prices shows last share in for of as ongoing quarter over adjusted year, common $XXX and Thanks, $XXX $XXX resulting quarter first over drivers. million prices. of than of are that quarter, sales cash increased and with Compared the and the first by of XX LP logs, X which straightforward $X driven to of billion, flow, higher like first by earnings quarter clean XX% million year. SmartSide quarter. summarized capital to million significant fourth in and XX% net times practice is on last five significantly more higher spending the result. generated investments heavy year’s $X.XX for is per the EBITDA We The operating OSB The growth

back further quarter our the $XX we of all be that billion reporting close per of Slide in capital terms million a million first had of week. All from to I authorization. through X.X shares also quarter. to report exhausted repurchase the in remaining Directors authorized continued launch second allocation, yesterday $X.XX by June declared plan LP’s million buyback $XXX that we Board and payable buying And paid will of on We've the quarter else perspective. business share existing end of million to the the remaining the of has equal dividends highlights $XX a the cleanliness share am authorization $XXX delighted million which X In Board spent just therefore repurchases, this dividends immediately. as $X shares. first. LP’s

million a appreciation million. and incremental million incremental resulted respectively net quarter which in to rounding revenue SmartSide compared Brad everything million basis, SmartSide pricing provides the Consequently $X price incremental On in and else rate accounts growth error. SmartSide million All transformation. the on housing with quarter. an $XX the a $XXX accounting revenue of and aggregating for for else $X quarter into of the OSB at single earlier resins of negative $XX X a right translated for just $XX the negative $XXX table substitutions, as the at million SmartSide OSB transformation referenced update the to first efficiency. trailing XX% shows The Continued starts. family Slide EBITDA the million growth everything on XX-month of dominates really in twice grew is and revenue the

is shows chart resolution Slide the SmartSide to into quarter. little bar not growth quarter SmartSide of of single starts. growth. left deep looks that the dollars more pie family for relative just right the to of chart of share This chart revenue Slide provides X. the a contributes repeat X lion's sources Given transformation growth the our SmartSide the on The on in The that a growth.

year-over-year selling XX%. Slide growth. and growth EBITDA by shrink volume XX that's high growth the under quarter for overall and one sales of the roughly The for resins impact OEE by have shows $XXX and or detail OSB feet dominated of Brad stabilized. efficiency The on volume XX marketing of $XX yields EBITDA margin is a such Siding increased in The supply OSB more total volume to on products OED. EBITDA alternate grew The of growth Siding XX%. for pre-finished an the increased dwindling just We also due Slides is resins sales over $XX by the products for that substitution million EBITDA quarter. and volume million of volume the that for result operating fiber higher show And on chain MDI said, X%. contributed average the their $XX segments XX smooth to million the record million and these compounded ongoing scarcity offset the Siding. costs XX%. total price And growth prices. for by grew to covers as share X% revenue Our X% SmartSide an EBITDA million $XX segment and as more in waterfalls revenue quarter. the new of in of reduced of OSB and point revenue of XX% revenue seems in XX EBITDA XXX%, innovative, estimate incremental to XX price square to substantially in reduced of at million resulting of prices and non-recurrence XX% margin X% sales million. freight Slide by efficiencies and $X

We to will that of course and chain continue potential other interruptions supply closely. situation monitor

sourcing strategically the Our summary will increase continue in for Siding to of headlines and as receivable uneventful. XX and the working the only OSB high the MDI only no feasibility meaningful the similarly flow other an in the to the and therefore for year. buybacks, straightforward to the taxes, also depreciation of the are not income as the a flow items accompany they'll OSB mentioned million accounts quarter adjusted is cash earlier. cash a And presentation, but logs adjusted items. The mentioned. proportional associated allocate have seasonal expenditures the with as you the cash in benefit LP’s for on sure, seven umbrella. navigated able income OSB of resins appendix, to operations be these this all net of will between I taxes for be EBITDA dividends, of was under results perhaps available measure than alternate change this testament refinancing they the segments difference And net EBITDA see appropriately payments almost operating cash prices And and accumulation prices, provision the is provides in small collaboratively only of and our capital are for already guidance updated a anticipated rather strategic in debt $XXX to from normal of is substantial of but to production Slide operating result Reconciliations grab shortage. CapEx, material the cash substitute having long-term bridge raising LP both as With to Siding entirely capital. OSB balances, XX to the large, Page and team. MDI agility and with flow team

As conversion, to year the our we the sustaining the our Valley base expenditures In Siding million demand million. the capital we Peace start visibility accelerate With words, our Brad by file all expansion, of are give capacity capital, bring in for $XXX in guidance about other remainder OSB, together $XXX intense range we're our the for the opportunities into said, growth to and exploring order raising of us housing Houlton and of extremely maintenance $XX quarter. second the CapEx fueling robust markets, and some remodel repair SmartSide of million. full

For in believe at will to OSB the revenue we the XX% the quarter result in continue that OSB climb second than prices segment, a higher sequentially with be least first.

least with which at XX% the consecutive XX%. fourth SmartSide of quarter also quarter revenue of quarter mark for would than another We the second growth year, above higher strong last expect growth

an sudden we scenarios, detailed EBITDA the record given and about other quarter or million, cash quarter another and least results demand flow I generation. caveats OSB second be for all of deciding at $XXX expect outstanding unforeseeable shocks just usual Assuming events, to

our SmartSide of for finish call mills strong Q&A, grow the the to to smooth continue revenue. to continues continue revenue want for SmartSide. for only and growth full the over year percentage and capacity our running handing for a Demand do very of expect should expert expectations Before be I we remainder shakes year. Also to volume total as at and discuss

second the of given by the year-over-year in simply more XXXX. the revenue growth in last XX% of we year, than of increase half cannot acceleration second However, much half

XX% year. And this take XX% that, questions. year said all So SmartSide our to roughly would growth bring be of long-term twice happy full with to a guidance your we'll previous to

Operator

of [Operator Instructions] Mark question with the Now Seaport first from line you. Global. Thank Weintraub coming

is now open. line Your

Mark Weintraub

you. Thank you. for Congratulations, obviously fantastic times

sense alternative volume they some they these that you give represent indications? And what can perhaps of get recognizing in might would can represent? the us the the it Siding as terms the of growth things costs understand be that and a In at, looking magnitude of you're we if could to preliminary to and

Brad Southern

of Yes, – types continued this investments areas talk and three any Mark, for of looking in really growth three I'll is priority order. we're making not at

We'd ground. facilities trained workforce of The first would make idea currently be like having capacity the existing all that adding of press additional a SmartSide. the at on

So those in wood a have called growth most what's to sufficient at growth supply cases, looking that locations accommodate we're least means significant at brownfield from that that of doubling a press scenario. as standpoint,

– Sagola, Secondly, OSB baskets. producing and wood will have Maniwaki both we after aspen Valley, even we and Peace

mill. [ph] that be greenfielding candidates two it is which what And land past, of on facilities far playing more those So of as, example that that as own certainly for finally scenario, we in had of Siding conversion. Greenfield OSB then could best cook piece the are the the would Minnesota a has

up those be continue three resources speak use Greenfield at my be not double grow would – of be next to but a about efficient expensive. utilizing then facility of of that of not most wouldn't overly scenario not redundant more existing the of It capacity to components an I is obviously with XX the – generally certain to a converting And mill then we that, the capital view over location. a there things and most capacity. out are a one. years some standpoint, associated in type efficiency a land, mill play the the brownfield have capital, OSB obviously because From So, would as doubt and combination lot would buying that obvious probably without an most of mean honestly Siding existing opportunities will be

Mark Weintraub

Great that and curious, longer a the no is Outdoor a didn't consideration? get there mention

Brad Southern

would Sorry, a be sorry. That's in shutdown yes. restart an oversight on which Outdoor, my part, of a facility

Mark Weintraub

to it that's than you what just, then thoughts I as your updated quarter, of follow-up Okay. sustainable know – business Siding, the had increased lot potentially over be? longer-term haul, XX% even last your on this Super. I any as this the And quick XXs drive just think long higher in how can expectations and margins view margin a was been, a where can type

Brad Southern

say emphasize we've much comes the which over improved – would the last basic is fall products the I that over sustainability launched years, our smooth, product. the mix, we over from a new or four shakes, that so pre-finished three we I'll carry which what prime premium

if the we to to to well. before trim on mentioned that next I've price call, can biased very be as As favorable

at as innovation does. business of share. that's big our the base certainly that is So obviously constraint nature We'll lab looking margin that so There gain panel. it strategy say and and to have as market competitive in increase a – we're that we we a on

we more way keeping when to if at builder it a it can that's home right competitive and be from so bit little And comes open our centers, are business a options the of business standpoint. pricing saying which to our the be big competitive

Mark Weintraub

appreciate the you. Thank I it turn Right. over. color. I'll

Brad Southern

Thanks, Mark.

Operator

our And question from line BMO the Markets. Mamtora Capital of with coming Ketan next

line open. Your is now

Ketan Mamtora

that but strong? got now, Houlton sounds were Thank about that like of coming the I the mill pulling you – you. going talking kind have a Alan, obviously to to about strong remains you year. And forward that. QX earliest given to timeline Last congrats, talking mean, is start the potentially convert just right sooner. on Brad, curious, you're maybe very quarter Sagola, when demand of XXXX just start-up, I'm all you've back obviously Maybe could

Brad Southern

of as Houlton’s the with continue startup, given, Houlton can, the I path, But as we the to facility probably from do of intend a on that's work a that obviously engineering. Houlton ahead which little that Siding, that parallel we year we mill first. get would that – say over give me the bring – the that huge are earliest focus a conversion quickly production first, could on we after QX work on be the Ketan, convert XXXX, to latitude a on be as but would to us we would

of on So what moves to that back to to let's standpoint, continue a demand need as update forward causes why from our quarter don't engineering a refine you we work either then and given do quarter XXXX, we or we Sagola. target QX only also but we'll

Ketan Mamtora

then, maybe demand helpful. it. about looks kind for Maybe of both order And both Got the talked in backlog and do like Siding. talk OSB kind remained year That's strong OSB you has of of about this what in and Siding? time the

Brad Southern

– Yes. The unprecedented They're it's its always extremely in both EWP just products through strong as in well. I strong QX. in mean, there but strong

businesses So kicked of at has our in of in file the too, there's files. four very the for order there weakening three no strong any I seasonality wood, America mean, that that's any in older South but in,

Ketan Mamtora

guidance, the of strong way leverage to of sheet, and Got the way of balance you just around kind sort announced asking $X way well. not it. thinking for robust Alan repurchases balance position. of around repurchases. final in you as about right the QX right suite, what the think I'm specific think fairly for And you've kind authorization allocation, share LP about quarterly launch about deploying sheet the cadence kind and – cash the sort the And about of a is that sort are billion capital but then question will strong cash what given is just of be of mentioned is very to plan

Brad Southern

is sheet, you balance the Ketan, mentioned, So, very strong. as

after authorization. strong be will this repurchase execute we share sheet balance Our

in company are specifically, in an certainly our you spend remind the will a this to a risking I by cash there's authorization, my not standpoint. billion at there's all generation plan doable you not from – view, So, view, it. $X we're

don't in to things a behind a obviously to deployment we've that to as And there's of is authorization believe if we got the we're our know later on only repurchase we're the year certainly we slow the moment. in you. I'll So that were shares I still on promptly we this share the don't we Board, promptly. significantly at at just that to share think, some a of rationale we're not – is plan next $XX it and begin tool flexibility front so still call. year, I have deploy but at which were down feel – me, good and on if and capital The allocation that I there price, but we've or beginning the them think because just buyback have even undervalued. our note justification shares, Alan,

four shareholders makes behind investment LP, way good a the again, prudent sense, share the then repurchase very our time. is I remodel that be – that given the that our our and aggressive know, so about that housing in remains at for that the for mindset reassure it in And feel shareholders I'm we rationale then will very economic about and LP. to a of But and quarters bullish in deploy that reality next I'm repair be

the over over don't began planned doing authorization money so. that timeframe, or spending from we dollar anticipate, about but the shares probably buyback we on past to we'll immediately. standpoint the want a pace been set that And year next, it well, we've to that a So, using I

Ketan Mamtora

the back Brad. in luck – Good helpful. Very half the of it. Got

Brad Southern

Ketan. you, Thank

Operator

question of next John coming from America. Our with Bank the line Babcock of

is line Your open. now

John Babcock

taking a mean, And might you guess I morning. obviously, thanks for growth just just about, if seen to, in questions. I like SmartSide. starting little I be wondering out, bit good able was talk tremendous you've Hey, my you

and kind talk you that's point, of to time And more your so, ability of and how mean, off it grow grow sense visibility on that. current? you brand if and for want to ultimately as market share. maybe to that's scale if some down a to of the obviously you I influencing and about helping of that is over extent have could kind this But how grow come get more get can maybe

Brad Southern

but compounding, I I the word is maybe you broad, said it's of credibility the certainly a was note then funny, broad I And question as scale. which that with and equity asking and did, brand and scale, with is were it penetration before the them down kinds lot. our moving we resized for websites DIY We opposition and consumer sees that retail. a is is remodel, sold value project in lot home. position the a It a the it brand, on businesses for big value typically box retail project different of And several that retailers. comes as brand for of markets, you makes the comes a the wrote in – call Repair a that this

consumer educate And a to contractor allows of and brand us side. a table expand with consumer a contractor solving kitchen so based SmartSide a using a ever then to as can figuratively build and And builder kind the way that credibility. convince really access about finally, as we brand

the about ability product. or it to consumers remodel, it's a compounding and with that examples, kind the that launch is a effect. market, the on aesthetic to does a of to top also the beyond, access – a our when was be but I talking of somewhat which of as the the exposed, really could our brand on have expert So, pre-finish that being that, can of appeal of prime repair provide And that it has and other and that it brings moves then, I contractor go an then just assignments finish wide then opportunity – taking we brand that – side and advantage

made lot of on has calls. a that about marketing talked been in these of and and investments fruit the sales So, past this we've

I'll we really it that support brand in to on focus point one way on And and continue sure We that make spend growth. that ensures future that. a the more

effectively you things experiences, through of COVID As learned we've you one know, that that do online. the can the

– about or And and then educated educating contractors cetera, big brand again, more once – online contract the I think source by consumer building installation, retailers to moved have on products about our how the educated has. certainly to to box public really online. getting got starting how being comfortable customers et

I'm the so focus really progress and And have so with far. strong a there, we pleased do

John Babcock

Okay, that thanks. quarter. just a I what you increase that you price announced SmartSide been us notice the in did for had increase And increases pretty then product? that this price or sizable pricing the Can was remind have

Brad Southern

are variety to it Yes, varies across that board been well we – And that three very and possible on that to varies another mix SKU, the regions change by about overall, has X% realizing X% then maybe X% now pricing. we've region, of overall. – four announced we in by but added what to the we're a been X% percent

that year. So say a the – gotten we've we've – probably it's to the increase on gotten on hold realization the it's of of on demand years, but stronger we prior the I in at price of strength would able us of the backend hold than right been just has pricing to bit list some little that now allowed increased the beginning

where right as modeling a be There'd of price we year pretty leeway from give of bit mix. now, us I a far on a way standpoint, I carryover, a the So, rest and say the looking are would would at of realization. good as increase little –

John Babcock

think you then Siding OSB, demand peak seasonally, typical remind but just what tends can kind far That's useful. as pattern seasonal some to I And during when that overall is at summer, the and for here? of both a me, as time

Brad Southern

Yes, John, Siding bit that really here of little really really September, historically for October, in my Siding I OSB, was – in time and been experience my has good. most a in in

the Siding some think up the get sheet. jobs try I into as also move and OSB house button for or winter, that's people to true

demand And So I of people we seasonal surge little were construction. that jobs seen the in then had think of I would weather winter the of really September, good demand some for a generally mentioned to in trying we've constant demand typically plateau nail rate summer was what complete hits. hit people October to a as see has kind trying kind

through even for historically and a inventory a we right looking pretty EWP the lack building as anticipate really OSB, opportunity well. dealers both October. expect least be at certainly we're given we'll good very some order as the now to files continued – season winter, there channel in see to a – into at distributors the we're good But of order in take files inventory. time in until They're So year And right now. that that next well. and strong as the to strong of Siding in I see rebuild season expecting

John Babcock

That’s of it able then I question just clearly last the be helpful. wondering turn – the on American sustainability to if EBITDA? point, results quite And I very you talk was South that strong. might were before the And about over

Brad Southern

a volume they're the we're doing little It's we've couple dollars, not things. standpoint, doing just major the allocated in Yes. there a years. from it's but and about spend improvements mill down the big a of there a down major, really that for we're capital extra next sustainability of From good scale some

significantly the we're And So growth the growing of I'll capacity South there. growth seeing size down see so. really good XX – market America or market over next months

some that is our economies, Argentina, well. especially of as Peru also Colombia, expansion really And has helped attributed good into and Chile, to in but

a it in from that us pressure kind from now America, that in South but directly no pricing when they a gives environment. markets tight America, North there the Look, bit. North mean, in of as pricing little is as well. way diminishes, as right in I more it a America diversified and we've imports were of are So component the tied is little things to it strength

but well. true down there. price to it's me be that'll retain in Historically, So for future, price good good seen been we've that But improvement able as appreciation down we really there volumes predict and that hard we've that. have to seen the

John Babcock

Yes, thanks, Brad.

Operator

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

now Your line open. is

Sean Steuart

Alan, you can to given expectation, in these line context on was relative of kept levels to this morning. surprising the you trend give at you. check Good quarter to questions, extent if SG&A, Can sustainability A it strength. our forward? Thank wondering top couple going and SG&A speak

Alan Haughie

entered that bear we Yes, giving new if time COVID us significantly One SG&A in of and that, a benefit is as cut you we this last the year, like had necessarily mind sure. thing muscle. to environment the

we things necessarily don't spending cost the unnecessary selling So replicate we of as certainly in marketing, the like as exactly back manner. stepped sort same a up on

looking already you unexpected for to we So and context, of all – remainder the of call within year. QX guidance that efficiencies. forward their selling that's we sort expenditure marketing put it baked what a we as you. the got increase but through particularly We implicit with into in go to Siding And gave some might

in the there future So will we of to you'll change an that but really as be the only invest in increase that's Siding SG&A see. fundamental the business, continue

Sean Steuart

give us over update you a the on EWP, how process strategic indicated at On the if Can that understood. undertaking you quarter last were review evolved any you Okay, had all has that for business. last quarter?

Brad Southern

and that business. in I'm some business. As evolved, phase and discovery in that launched we've with some the as we've nothing about pleased There's process a very just to the and response the interest that had as having future interesting of the some the and today. bit – we're quite of progress share We're – discussions far

the Siding large going business to impaired for acquire of and is continuity is We little base our happen are because a extent also a or base on distribution solutions. think typically they to is structural what distribution focused we

that's So can. is out the continuity we're of us good of we interested progress report important – the that's talking that within when factor and a about. continue to is quarter a out And we'll for parties one the to that business. getting A to certainly components

Sean Steuart

That's have much. Understood. The of my I questions very all have. been answered. rest Thanks

Operator

line And with our from coming Kurt next question of Davidson. Yinger the D.A.

open. now is line Your

Kurt Yinger

I as thanks mean, everyone. one terms most of I consider my And impactful couple for competitive share of gain last think look been start the of there? the that kind kind wanted taking the off year? questions. the on And in priority years, you here we to are is mean, just what next in you the factors morning, Siding. in or to ahead on things what or of any highest two would Yes. Good ability different list have your dynamics I do to those

Brad Southern

very, have lows last they months so with we at good growth lows that seen. seen has to the in XX the with before, our depots back or a us. incredible We've and there retail Okay, growth [indiscernible] mentioned very depots as gains market so, looking been along beneficial share position

in also gains we've market there But gain market been just share us Also was for position for in the say So our another and and up us, the big very which share I believe well. shared consumer in through the has shared. rebound strong. panel our housing picked strength good. business, positive bigger the And overall some really as have come and there position is retail extremely then I'll in

certainly focused repair our remodel. and forward, prefinished smooth market gain launch is on and Looking is and share, however,

have there, remodel. not repair is, do national strength do there strength While have geographic we and broad in we

lot remodel the believe we that then a that. of sales year what And our So, associated us of grow area and product repair And marketing national under-penetrated along in builder. front the us, large focus we're is with strategies that to other other we've to reason innovation. in behind a And for the us for there's and launching we're opportunity segment. address got currently a this with with it's help

and let serve from expand and think opportunities environment. in like this business because into and answer We're portfolio. lap say, strengths really diversifies think diversity we I it of that the business And of the has been Siding at of panel. and one that up product in growing position because expands we us siding it's as they our further then segments. it So portfolio. as diversity take specific of And not products and to the going sell and and on strength advantage our in these is of that back the solely product good our a where Prefinish growing channels And dependent look I just to market the then [indiscernible]. can when historic me market dependent We're on penetration shapes our well of in we of panel I strength position not long-term solely portfolio that we add think, arise

Kurt Yinger

second the when accelerating of about talk OSB stand with perhaps the back-filling strong, color. remain That's but lose about necessarily you How what you potentially they my guess Sagola? see markets think where capacity then remain OSB to we you'd And were type Got very one, would today, not it. helpful I kind things strong. goal of of if conversion,

Brad Southern

for Well, thinking just way across we our that the part the expansion to looked capacity justification restarting Kurt, the Peace remind at was you integrated Valley two around was of businesses.

And we Valley. so we feel that the the like from part of in can Midwest especially access we're that customers addressing, country Peace

year, running this So, to of up by time bringing have half the want with later startup that this start down. plan and facility year, Peace we fully for Valley, we second Sagola

we're idea OSB really And was is as addressing Valley, across start entire that far Siding. it in But continued So of us up the then we how improvement great front really that are Sagola our and as focused on is growth network. next through Peace in doing OEE that.

in our will running single-minded getting market Pace pretty, that OSB by up that share that Valley. And and we're mill the possible. as be quickly So, expectation protected is of as our startup

Kurt Yinger

Got it.

sense. Okay, here QX. Well makes in good luck

Brad Southern

Thank you.

Operator

Inc. question line the next of from coming Your Stephens with Connelly is Mark

open. is line Your

John Rider

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

and in your look OSB too inventory or about OSB, between you on at when has And tight capital question, this how working has whether first of So, here? side gotten lean changed be period should managed, you distributors? thinking it your supply

Alan Haughie

of partners that that If the lean able in partners would taken have not been their product the one Obviously, would demand as – and assume and not our to could I has there's we too inventories lean. we year. would rebound argue have no question being down no distributor foresee there's taken. May, downtown very John and working us, gotten brought last in had had well. we capital July And mill June, our channel

went looks I we're kind at generation could a us management, change struggle evidence that inventories rebuild the back year demand. late year, early of all to to caution last So, in we'll level. that to because, if the that will I don't the think, But really, mindset of this to trying – that into is last it inventory had spring with all in or know up some cash is we keep normal if way spring that industry put position of

working around long-term think it's a more philosophy I change in So, an anomaly capital. of than

John Rider

then Okay. ESG your That's hoping helpful. have you sustainability targets you sort set have OSB in talk clearly good you up And in programs. building space? could We're you of story? right And now. inciting the for stuck of bit We're we ESG material think scrutiny claims, particularly do really how more what curious, environmental a about are rising Europe you seeing a and

Brad Southern

we ESG think, right other our saying, of stack a we're start me this type or of are And up Well, right mindset data-driven environmental some the we be very will by very, And targets. exercise now on procurement our well footprint, now because let given strategy. sustainability in the for wood collection working obviously I data us. setting

it. on focused are We

advanced reconfigured have committed and setting provide to board for this oversight and We and participating high board expectations a to containers. are seeing then

nailing sheeting for are house. sheet good of to you're a mention the coming carbon really feel the I or side you specific XX-year story. nailing a have be targets to concept of year just what set I we than out other we'll house house ESG procurement the sustainability. a siding you're When parameters like back in so standpoint will on And around just other warranty, the as later from a a

work and before that the robust to is you'll quarter we'll with reasonable, end we But something if a we're be we goals set that So story, really back or a it's have that I can report that year. the do give And us and but deliver that on the of is believe another to are on. two and discussion underway. good make we want data accurate, we that going sure the

John Rider

you. Thank Great.

Operator

Paul coming Quinn the question, RBC Capital of next Our Markets. with from line

is Your open. line

Paul Quinn

morning very thanks Good Yes, much. guys.

Brad Southern

Good morning Paul.

Paul Quinn

with quarter. But even more QX. looks the wow in Just robust

you that to what file that don't have is Just do would XXXX, a market your you really increase SmartSide you business, want gain that second for maybe is order or something potential wondering a – and start just the in that strong want it share? to on price

Brad Southern

Well, product there's pricing now. strength offering right the in

is them on one And of about various clear part that. earlier we And of the be working of mean, something is crisis, that. There's ways rebate of the pricing getting would kind so, realization I hinted in question on it. on about to mind, price always is backend our

to in against But a can And taking be the pricing essentially short we're side end while the manage with of prices, I'm – bid going be all get most demand the And appropriately. for term to I the there right we the of so, in think, strength we're strength opportunities substrate. at cases, we're now competitive advantage to competitive. have day,

something these demand And competitive at agreements multi-year. time position, not of is even least the tight in so Especially multi we're are that with we're maintaining if builder, quarter of. a a mindful

competitive a on whenever I And price on maintaining a on, market we we share. focused I'm And a we because answer, so, want well. as competitive are little know, that and price, being because advantage take dealer don't get sure situation of are also don't bit gaining focused we too faced but we foolishly. we that get it, that we distributors do maintain to and can be our can partners we can competitive make that position

balancing it's daily. really is something So, a it's we're managing act, to I right answer it. And that guess, way the

Paul Quinn

was to cost impressive. do SmartSide that solely of in just or reductions there Prefinish, well? then Is margin And with uplift fair. the pretty is segment on the that's as percentage higher Okay, in

Brad Southern

leverage for It's Siding operating the the both, strong. is – we've run out facilities had both OSB very we full And into the now. and

that million that high we last feet very Paul out the and of production that sell margin. Siding has So, margin the product a on of

out So, you're mill it profitability running can a sold is really production. when full amazing what the and be

price but is efficiency overall the so, key to helped, that. And operating increase that certainly a

Paul Quinn

slow be Entekra. to ship to idea a you've a an then of able can update marketing OSB, in the half lastly, could start? on what give be give And the Is volume you stirring or expect second And that us you got start the year. kind you of of then on could if over faster Valley to Peace an XXXX? us just up Maybe

Brad Southern

so million Valley. the QX. of all Yes, Peace at about XXXX $XXX looking out in today for we're sorry I'm

order And the the $XXX Entekra. pleased Entekra year, with very to second of then half be continue the for million file fee. So we at

as validating, the file of in through the ever-increasing process models are order facility. the far We as getting that

for that's the builders part we challenge our business also our bit availability the a maintaining then is And of And business trying made. figuring that's how challenged And aggressively. out agreements way that think rise rising us. doing the as on workforce pulp what lag encouraged continues business say facilities, it But facility figure We're for out it's to on start hurt is there. to in been challenge up solid But property that's a more mature profit very far more a been from a as I obviously sure. to – that have startup still by Entekra. so market demand how a we're meet I But the it validation labor as lot a lumber for of the the highly little lumber price, I there. where then pass what that we're as product has been has the lumber has order with pricing. standpoint, still a volatile by one of us kind times, I'm will in more these The prices. pricing strategically through.

Paul Quinn

capital no more required? And immediate

Brad Southern

no some we yes, meaning. working No, capital for them, but minor That way do capital. provisions any immediate is

Paul Quinn

Thanks a lot Brad.

Brad Southern

are You welcome.

Operator

Bank of of with is question from next Wilde The line Mark coming Montreal. the

line Your open. is

Mark Wilde

Brad. morning, Good Good morning, Alan.

Alan Haughie

Hey Mark.

Brad Southern

morning. Good

Mark Wilde

were now, two to right housing to starts? the let's we overall about stars. you up up Brad, if market the and million Is million two I'm there just curious moved think to it OSB move if see say serve capacity then to continue starts, we

Brad Southern

No. probably. capacity X.X, be [indiscernible] would X.X, and Peace startup the after The

there Siding. Fields hasn't to an to to converted offset at when this and shut market. in the level. facilities we in XXXX, XXXX, the was look Rain think back plants start looking Mark start get at permanently that about housing three way we're or then that yes, and all three two X.X So back it million so down us And you serving so been shut or [ph] And then you since the up didn't – industry

a X.X, So, is in creep more X.X, advantage, there. of taking the industry X.X with creep

a it So, for tight be while. could

Mark Wilde

thousand is starts Okay. and And like me a feet. billion square a just like a half hundred remind what,

Alan Haughie

are Haughie. Alan rules billion to in of a the consumes starts is And this for of have two about single-family mind a that keep about Mark feet XXX,XXX adjust The to thumb mix. OSB. you

three OSB single-family a as start Siding start. multifamily times a and about as So, consumes much

So, is mixed right the of single-family market in north we're now XX%.

a billion You want to to adjust account bit fee that thousand upwards little that. for starts hundred per a

Mark Wilde

beyond just think right ever the and deferral so anything you far that taking guys seen I sensing lumber demand curious. areas have you place of destruction Are or Brad, then some demand, where pricing. there's both we're in I'm in we And any OSB now? terms taking market Okay. mean, place

Brad Southern

to I yes, I I down. there deck, guy referral, build a a demand who build come a wants prices deck yes, until is, he's know going mean, lumber Well, not think to

are bit there's in demand believe the South other a destruction pretty most in in little So yes, starting be is the for. around believe availability export could specifically some there housing one that maybe America. local for don't doing I I it's Yes, strong. starts starts. that I but exports I who person that a there's an that know, that deferred I do And is markets even standpoint. Europe. housing some think We're panel affordability has more coming going just job it there – past issue in And that to similar currently that projects see standpoint an think online. from from in

substitution hit or either happening immediate And think But some I is what availability think it. so we lack there I is of deferral due of don't of realistic for to be to probably yet have any and – we haven't affordability kind supply.

Mark Wilde

just, last Then in mentioned you've you downstream American down from quarter products, like two Siding the Latin All or a products ago, think, the Okay. that I right. of me, to business. the trying one do some were think, I

update Just changing products always I of know, of building codes any not American preferences, from is building on the do. kinds of to those kind thing market? Latin the uptake an changing easy

Brad Southern

Yes.

have harder are in adapted. we or that So, in Chile actively Brazil the building and working codes is it

But not in Brazil, in and Argentina So, it certainly is. not either. constraint a that's in Chile

explain in is Brazil. to it highly quickly Just local

a change So, to – a it's you change. macro can't harder in do like building macro do

required So, you is by having what's of up to changing code almost there. kind basis. What end would project consider project down we

share market – market our to years sold the the startup in Chile portfolio. kind up good we've press America opened up got capacity Because against historically, at as a us been are past South constraint for but margins really And of there. Siding codes the with it we And the far pushing constraints are the XX In much really been focus there at there as team building not the we share. growth down our we've grown Siding in of But slump it's we for market the successful, had sheathing, next, there, we've fact look conversion, being have Because really is business. perhaps EBITDA growth capacity where our want and as there, And down So down on to we've to been future. an opportunities sheathing down expanding that us OSB of growing slow. we hasn't always as issue platform versus in since down some it's for who it's focus that. the working as some ago, of see for of side really that a of really good Chile. be we've the as haven't areas incentive as the grow growth increased but more

Mark Wilde

Okay helpful. that’s

Alan Haughie

a opportunity do Argentina, and in And kind Peru, do we're on wood our especially that. the period – by construction. – Columbia, which other encouraged use I'm there, put of very under-penetrated have

strategy also there geographic growth So, there. element a to our is down

Mark Wilde

Thanks. good. Very Okay.

Alan Haughie

Yes.

Operator

the with line Mark Next question Seaport from is coming Global. of Weintraub

Your line open. is

Mark Weintraub

OSB some implications? $XXXX, random quick than in One geographically more variation couple now, enormous $XXXX there type Any any at and you. follow-up. area. got of incredible right regions We've the Canada, a the thoughts with pricing $XXXX, were a month, on these spreads, in Thank why pretty Western the least regions,

Alan Haughie

Yes, Mark, Alan. is this

strong that OSB spreads wood. start available opportunities. isn't to gets in typical there just is demand up see And you that. available those now you when that's Their happens so to regional much about shipped when address open – continent consuming that wood every market arbitrage there in enough As the around to as OSB know more really address isn't there is times,

marks. region different a southeast. building we saw to by see So, The in heading starving satisfy region, possible prices, you'd is wave way if in of more only that's the west normal times OSB those to now

And now. so it's just possible less

Mark Weintraub

just quickly Canada? So, in southeast, why go $X,XXX cetera, Western in they why prices et wouldn't that the wouldn't price towards

Alan Haughie

to typically would phenomenon they where where environment to extra to coast there in an create would southeast satisfy towards west would product there scarcity that And ship. that was in wood in equilibrium. an the those available the less the But that demand, Well, leaving likely environment is little southeast. is isn't so tend happen prices

Mark Weintraub

out. That just all contracted

Alan Haughie

Exactly.

the opportunity means that reduces product the that so that market further Mark, which be part for open which reported, is transactions are to recognized and less arbitrage issue, scarce which the that other the to means be themselves less Now there common, reflected that of is in prices. – is data

Mark Weintraub

you. Thank it. Got

Alan Haughie

Yes.

Aaron Howald

Thank us questions look first safe stay everyone. day We'll our XXXX. with Well talking conference. to our a to to joining soon. with the results no you further no discuss and for end questions Yes, end for of you that we'll great will forward Have there. quarter

Operator

your that does gentlemen for conference participation. today. and conclude for Ladies Thank our you

disconnect. now may You

Louisiana-Pacific (LPX) 4 May 212021 Q1 Earnings call transcript