LPX - Earnings call transcript Q4 2024 | Louisiana-Pacific Corporation

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Operator

Good day, and thank you for standing by. Welcome to the Q4 2024 Louisiana-Pacific Corporation Earnings Conference Call. [Operator Instructions] After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Aaron Howald, Vice President of Investor Relations. ahead. go Please

Aaron Howald

and with and us the operator, quarter everyone. questions. you year Alan Southern, will and this Thank morning XXXX LP's QX Thank discuss good take remarks, LP's we Chief Financial a and LP's call joining results full are Executive our of Chief to well fourth outlook XXXX. results for me for Hosting as you, prepared round as Officer; morning, our Haughie, for of Brad Officer. the After

During presentation this is to web to morning's call, we which will LP's that refer a investor.lpcorp.com. page, posted has been IR

Our X-K other are filing, also and materials available there. press earnings release

earnings are Rather than financial this to as and incorporate Brad. Today's discussion filing. Slides statements further morning's contains reference. also X-K materials, those over described metrics them forward-looking with contains reconciliations The by supplemented presentation. And appendix of by that X will I non-GAAP the reading on and X that,

William Southern

OSB, multiple and managed and Aaron, share gains strong prices for capacity XXXX, saw growth, records as importantly, and solutions, operating joining efficiency featured thank EBITDA finish. net our QX record that for structural increased In for in margin strategy Siding export with higher executed overall today. well and market XXXX, Thanks, business expansion. slightly we than the records to for a Siding more finish In and was but effectively, sales year a you again set as discipline. us grew agility

brought Siding in grew QX, financial prior slowdown expected we Compared to and the fourth year. Page as the In the sales quarter year, a season seasonal shows the presentation close. the the X% for building to of by quarter. X winter weather highlights saw full

growth, LP cash in EBITDA $XXX volumes a flow. effect million in an and the $XXX in increase as million Siding operating resulted and decline sales, million OSB of in sales whole, OSB a in $XXX prices net For in

repurchases. After investing million and shareholders maintenance LP $XX and through returned growth million capital, in sustaining $XX share to dividends

full expansion in $XXX grew slightly capacity the share in billion XX% driven and billion. and achieved Siding to we XX%, sales earnings $X.X and Thanks the EBITDA. efficiency, doubled XX% These margin Siding growth, by year, operating $X.XX sales per to For by increased represent increases higher $X.XX. and utilization million This OSB prices respectively. to nearly of

share we the $XXX and investing used in by CapEx year million cash accomplished continue LP. our is in shareholders $XXX world-class TIR, $XXX total to enough executing million safely, LP returning not operating capital ending but X.XX a this importantly, considered allocation good repurchases. million Most rate. dividends and the to it's for flow via This strategy incident with

We gets LP. while stop will at our working safety one working no never injured ensure performance to to improve

to As we but not be call time XXXX, look what and is R&R, what happened. both for a we different exactly to year to year flat housing forward XXXX last businesses it radically is markets. the was On expected soft outperform a said our this market we to we for expected both that year a year, ago. This

precise in XXXX, the were which quarter. starts fourth Single-family total the year digits. the in In R&R for starts for X% low- expenditures year. and but total to the It's is repair estimate that over-indexed year, remodeling were mid-single market, to X% fourth better, up U.S. were about single-family the and to but be X% quarter. LP fared housing full hard U.S. down down we especially of in first housing, half down X% the

new by of all in and product saw in for happen. that driven demand creation broad-based Siding all the well in innovation, offerings seasonal it product and X% year. growth full in Siding backdrop, serve. is resumption all the as as growth this QX patterns Against teams our by normal LP's XX% We revenue demand categories make grew by product amazing our geographies efforts, superior we This and

enabled duly facilities. at and LP's our capacity more as utilized Volume growth Houlton, Sagola expansion we new Siding margin for Bath

of this growth, achieved result average, margin OSB, cost long-term of achieved control soft EBITDA capacity below a year the long-term target full above disciplined for a cycle demand, market. the As Siding and efficient business to thanks our EBITDA In housing management. starts despite despite our average XX% long-term

excellence, another strategic is operational in another year growth. R&R for XXXX of in Siding, perhaps gains starts share with control year consensus on modest Accordingly, is expectation The is In spending. in and like execution. rebound planning a flat for and focus cost LP housing looking OSB, the volume

so seeing encouraging file growth guidance Siding that far evidence order are our XXXX healthy a detail of that in in we with discussion. will We

recent we that of demand our our facility to Bath us capital needs. meet demand room conversions Siding. outgrow grow light we ensure Sagola opening our increase, the increasing and and prefinishing not investments do Accordingly, want Siding our relatively mills are new customers' our product was The in year Houlton for in innovation, we and to to expansion of capacity to creation a If in gave investments. continues capacity. XXXX

will with capacity projects next starting starting The in at facilities line That year. parallel. XXXX a significant XXXX means after significantly pre-finishing next increasing the at export Bath, of manufacturing and a in project portion this later increased will happening see expansion that include finished our existing second and Houlton, capacity expansion Siding work LP investments this

finish late these our capacity growth to with keep grow starting an rather we At capacity, inefficient balance. like rate now time early allocation Siding and much to to our be for should risking Siding, a year about in of during with be would X% preserve completed period ability extended volume utilization so and higher we We much of than historic projects are COVID. new saw our export rate per than little growth prefinished rather

will and reinforcing expect we million few growth continue operate that, our and which, its own the to that these I'm With share, to minutes, fund to is a strategy, the generate efficiency detail the The will growth. confidence will and results committed network. fully call we and we safely new Siding comfortably confident in Alan of Siding can year, detail business products, to scale financial that EBITDA will turn increase over XXXX LP over take executing team after investments, $XXX gain I our the this questions. market your manufacturing outlook, to Alan As our our in innovate

Alan J. Haughie

Brad. Thanks,

said, few well. of also Brad the strong shaping XXXX finish. year to explore I'll the to be the up fourth first brought And minutes, quarter a As a in quarter as seems

quarter were single-family XXXX in exhibited grew drop by by by largely demand the X also seasonal Siding. not X%, patterns seasonally, but the activity starts points. shows year-over-year. as volumes this, with a fourth waterfall quarter normal faded. X X sequential points just starts down fourth for building beating Siding Single-family Page in volumes Despite

selling require revenue mix. Higher will demand points meal reinvested we X and these prices earnings price in another staffing, largely marketing XXXX production. growth, added and and half half selling roughly with expectation from the of higher list coming that And increases from with in

points flow-through This million being volume. of with $XXX from it X, For price prices the $XXX outgrowing on $XX million in from million coming Page Brad and million revenue, it $XX million growth Siding $XXX full said. added underlying grew the the $XX as XX of EBITDA, by revenue volume in markets, million in year added and from

X.X basis benefit XXX Increased mill a of a points offset partially million margin, material XX% We close billion for higher creation by with demand investments deflation XXXX, in last feet is of a our and capacity. XXXX. EBITDA Siding price in about which square XX% staffing, raw than year, nameplate over $XX just from to sold XXXX

execute expansion runway into projects. while healthy to we a have new capacity we So grow of

on OSB, in revenue Page fourth X, quarter $XX segment the in cost about the For EBITDA. lower both and prices million

recovered control, most and the what half raw through managing impact these the the OEE utilization. of impact effectively improved effects of and can higher EBITDA material by of volumes, we prices efficient revenue However, lower business of combined the

pricing solutions year-over-year, by was for in $XXX $XX Page were $XX average, benefit the year which, improvement higher percentage so a somewhat in had overshadowed ran, volumes, efficiently. that we when EBITDA helped, X XX we higher more of On OEE shows revenue means slightly point the commodity the full and essence, million but OSB. million structural in from and in in prices course, million by

hodgepodge and and deflation, other items the at a year labor just million $XXX under of sales inflation material small EBITDA. net Raw left billion in in $X.X

$XX fourth bit quarter the million but cycle quarterly our a level. above ended of EBITDA year that the well declared So average below was

cash capital slight normal are year. full and cleanly with decrease cash the a flow, for $XXX straightforward Page shows working price $XX. operating XX of most rate. EBITDA returned the pretty in tax cash We and capabilities quarter and translating shareholders, helped year by manufacturing a flows to shares our in $XX and a excess expand below at and in paying to dividends average volume-weighted million maintain to repurchase invested the to million Both

cash, debt LP in $XXX with ended million net and liquidity. almost $XXX total X XXXX million in

an And authorization. As under leaves repurchase roughly more million million share remaining $XX preexisting LP paid the this $XXX outstanding has shares additional to XX, of repurchase million February shares. X.X XX.X and million

year for and quarter LP's on XXXX first full XX. Now of the is guidance Page

continues consistent the year. For clear, the early and be in seasonal Siding, order to healthy be file typical the rebound to with

realization annual increases. now Now minimal the while January, was price in there price price lag fully list reflects

and growth XX% to expect for $XX revenue we and in about Accordingly, first million for $XXX range. in $XXX EBITDA X% million the should margin quarter of million XX%. million between EBITDA sales land between $XXX the an

expect flat $X.X points X of to to year, For growth although billion starts, X anticipate $X.XX we the we bringing billion. revenue nonetheless full currently revenue housing and between

for again, million between EBITDA be $XXX margin, should million of EBITDA around XX%. an $XXX and

Friday's and no the would future of prices revert merely average assuming business. longer-term $XX OSB quarters, approach reasonable modeling we we to million. the EBITDA cycle land a quarter are estimate between OSB, as $XX to last offer For to length levels, million and EBITDA of prices flat to random expect And potential OSB first published for

the is the any our clarity which increase the X,XXX that have tariff quarters. XXXX And impacts from average incorporate fourth about square $XX the note inclusion slightly we're EBITDA, feet, of in net average cycle in does to through should using $XX to doubt, same estimate the the EBITDA we algorithm reflected them insufficient cycle per I to while second for data for guidance. outlook avoidance of finally,

full continues. The year and state first therefore, assumes the guidance, quarter current

new in Siding the scenarios. somewhat to under shows chart will demand trajectory, years, meet capacity X proceeds on capacity schedule we sometime these Now if sooner. additional prefinishing need we'll of capacity XX necessary to on and be X this will this growth Page need next press additions that The

XXXX a significant As investment. year result, of will be a

year have a million X of heavy about in increasing of timing, largely XXXX more most OSB is in specifics the growth in Brad on returns in total spend importantly, as We'll also modernization $XXX likely to and yield capital in half end parallel, XXXX with coming in quarters. green costs expect XXXX mentioned. also be expected with will projects investment projects and and to We some efficiency expansion most second improve safety. designed maintenance project Sustaining

So And we enhance invested to our was strategy. $XXX we strategies, in that capital reward and XXXX and the generate our for over year. a capabilities, cash develop to million rest our We in maintain generated consistent to our and people. growth manufacturing executed which strong allocation execution our with operating more conclusion, return demand products and shareholders flow,

of that, a the strategy robust what works, the of We expansion we're housing the and most gives capacity growth, execution have shareholder call open us of positioned product remodel for I'll which more we confidence to well Operator? and a returns. and believe have all to make a markets further offer to invest in that balance that sheet, and with innovation, record repair very And solid Q&A. and

Operator

Truist [Operator be Securities. Michael question will from Instructions] coming of Our Roxland first

Michael Roxland

the year. think obviously, you year? you of Congrats growth us to is, cadence I'm be comment comment, could about this continuing on demand noted, strong. to if Lennar pull-through on and as a help wondering that strong the Siding Could finish you've the

William Southern

Yes.

ramp-up with didn't Lennar. get ramped So homes say signed. was have We immediately, full all a we execution period There was after I like the the obviously. deal into contract would

would pull-through. So scale or full expectations say or as I And -- exceeded we're far with at as second the running exceeded We're it's volume them. our in year have at at that agreement.

Michael Roxland

say Got performed? you say mean of latter or -- the more it's it. [indiscernible] the you than would When I it's exceeded, at

William Southern

of any the it's homes. but for a materially, and Yes, contracted bounds it's we the performed of mean certain as sorry extra Yes, are amount expected. agreement. homes within with confusion. And mean, we've and there, a gotten I I little for here those

Michael Roxland

Got it.

Okay. And more more just second should which are the or OSB, shifted solutions, weakness any to -- production be which have what of have in given the question, structural to just way you any weakness been commodity margin-accretive? from opportunities? given out shift look build cross-sell And Solutions commodity in particularly BuilderSeries and large are Structural you as making for handicapped to you a OSB, tie-in

William Southern

invest to fairly relative have Solutions from a Those to and do We be quick continue to investments grow Yes. execute. to manufacturing tend conversion to Siding to small standpoint. Structural

times structural constraints solutions, product So into we and some that run there very are but around that's availability rare.

So right. yes, you're

As grow were enjoy get to in been on of and to SKUs to in a from and -- key strategy. flattens have margin. XXXX. a that proud trend strategy part have we out Structural below commodity lines, of that we pricing our I'm sell those through that strategy really plans where or XXXX, and our Solutions distribution That's is capture we incremental continue margin pull is we to

Operator

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

Ketan Mamtora

with of to be talk products, it a Siding. higher enhancing. anything the else? Clearly, is quite you export about level Siding margins keeping on at that couple sort may finished is should the same be Can of factors margin EBITDA start growing about Is it Perhaps nicely. offsetting We you for the point the level? price Is that Can know SG&A? talk and margin business in the XXXX?

Alan J. Haughie

and guided sort of Yes. say in that's response. a the do XX% for a to be we've margin Thanks, I question. that Ketan, burning This of a time for EBITDA I'm so little trying my to to thoughtful first sure careful question. I'm Siding going the to is bit be -- the want a business.

want sort do in I the reverse. to So of answer question

they're you're QX price on in that seeing and waterfall, the leverage continue. volume the expected full used year XXXX and to the that The you waterfalls flow-through to our see

pure at volume conversion and of XX% say, price course, about EBITDA flows to XXX%. Let's the through revenue of

So price of flow-through and we XX%. about get that volume kind of blended

that. the for we're not you It's us harvesting. consider trajectory thank so growth way in for -- But early too question, even but LP's to

in about costs So million that there's the this are included of year full inflation. $XX guide

admit let's that certain. remainder I of is The that's so labor, will that's materials, it, and speculative. X/X raw call Now largely is,

million There is high about closer and selling $XX $XX of to expense. the marketing million to end additional

continuing broad said this marketing dollars. And public to on future so in in we growth, order to of selling as sort invest secure yes, year's generate adding, calls on business well before as we and individual and are it encourage I've help And discussions, this.

the to or in We with there's that further to. remodel million amount push growth. some staffing encourage say market the the discretionary selling market $X the of, and marketing of us and it, higher further investments the roughly gains very per staffing future guided top of growth costs in expansions call call generate discretionary associated capacity repair engineering share additional let's and and business dollars mill on side, Then of much marketing hope on was foot give does that the we've let's a order I a gained. again, level into that require, will it, the

too year. challenging. in the is whether fact building always We're early bit housing XXXX feels a So price flat overachieve. spending how in we there's obviously progress discretionary going not just a given to we optimistic, are just not basically or that a in and as ExpertFinish material down as certainly, the to given, that impact mix It's housing us point It's market reckless probably to assumed And in and that to a it from all not that X.X margin favorability. market will R&R. take about always, that What's included any as be would of percentage have stuff X know the but that described. the I necessary help

always is gains definitely predict year occur. quite this can't and those gain market how market a share share and So and when where will we

So that's the answer.

Ketan Mamtora

very That's Alan. detailed. helpful Thanks, and very

total will expansion capacity kind And at point kind to X? kind of share then of you I this can it. of And Line X, kind us be Line planning? So with switching of expansion Houlton investments capacity appreciate what Siding on are you what on

Aaron Howald

Yes, mill, the to will and of the had. XXX The a to precisely expansion parallel previous the a about Ketan, be consistent Houlton projects don't existing press. But we've think so a adding how I would that details that million line feet of gotten line we've forming volume. adding add manufacturing expensive going that's are into expansion returns be. with

timing So have specifics that. things as more and about like we we'll get that, that closer be to to able and share

William Southern

panel. we'd trim on from and I Ketan, lap a capacity say that line focusing be versus just manufacturing standpoint, the And would

Operator

next of will Susan Maklari Sachs. be Our question coming from Goldman

Charles Perron-Piché

Charles today. Susan Perron for is in This

Alan J. Haughie

gone has octaves, voice Susan. down a couple Your of

Charles Perron-Piché

first, implication look do the you and Maybe new see guide Siding the want for market, biggest the opportunity to and XXXX? we the I maybe the for into across no. Yes, versus and about growth R&R outperformance as shed where volume ask outperformance construction,

William Southern

Good Yes. question.

really are to growth year. weak, some Shed we volume first compare rather half shed. probably XXXX, -- last all There in when recovery expecting product We there percentage especially this is of offerings across volume was is year. or

fortunately, now. So not normal. right little that's to strong back a It's

as kind growth any sectors, to sector if retail, leading And margin also expecting the well all looking So builder above at good that it the that geographies. all the shed moment, growth be and across is remodel. -- we're but one at as we're across new of repair construction

into -- So the files good start we've to everywhere. -- strength really have visibility and a we order a really got is we're off strength

Charles Perron-Piché

we raw maybe also about freight the 'XX. for color. good can That's talk you. material expectation and Got And

impact cost? about price the And as it on think setting how for ahead? alluded would $XX for you year What Siding, I think structure tariff potential cost inflation. your million does we imply

Alan J. Haughie

we'll does million referenced avoid I labor one. and take The about second million inflation. the $XX I'll include of then easy the or so Well, one first, $X

and there we raw costs. be [indiscernible] it that's And already think -- So And costs, by is as been we'll reductions was will MDI in that's increases in certain, rest gifted. paper given material. mostly the offset see

piece admit some material for is But will potential [indiscernible] anything that is raw to there I So particular. speculative. inflation. in broadly

William Southern

Most of derivative raw are indexed other to products go than material into major that it. wood our various

to of these to benzene forecasting kind around have oil we do So cost do analysis. cost, some

and And So any did flows. assumes replaced cost raw about that than drove wood. that's for price the materials far assumptions the assumptions tariffs we as the that raw around that other the as no on we've analysis there's increases talked nothing material

Operator

Our next question TD of Cowen. coming Steuart be will Sean from

Sean Steuart

A pricing. couple it exposure. of with you a and intention the supply us ability on how and on I'm OSB guess, And of can Siding? to, terms and offset your sense both questions. the customers just to on in complete wondering Siding try tariff pass elasticity perspective and market, approach in I of intention revisit tariffs tariffs materialize, Can pass on tariff OSB much want if response and for in when needed those be to Brad, the to engaging you might if fully is and demand of give I speak the to your a

William Southern

Well, traded it's for a OSB, commodity.

way So customer that I be the that pass -- onto cost there's other works. -- OSB the know than floor. you trading a how through mean, at And not direct to in will

price that's cost So in tariffs structure will will industry will OSB where structure the be. price there's the to price and the will price cost the due -- curve to -- be the cost reset of be of change OSB

It's the be on hard with impact Siding information have what today. we that the to will know

Canada, there. chain in network. supply to we ability mills things some optimize if on know, supply we are volume Siding move As do change around have can the dynamics have In there you were the in. to chain tariffs we to the our do And X

any a would And we've how planning of because a and because so Canadian how mean, gotten from And across where scenario haven't obviously, the are that we board, doing go it of have we the that yet -- manifested -- we haven't the discussion would we around would be done number situation about on But particularly tariffs. impacted we get really I level what we we've certainly lack clarity. of But would do would minimal a around industry perspective. significantly put had customers into Siding gotten it. to aware

Sean Steuart

still growth normalized is I'm growth more In X if it, share whether And a I housing, feasible potentially a the sales me guys XXXX growth housing number right, to the that bit difficult we to still the a that, X% in or there's any reflects X% it's I'm sales for uplift nuance tell get and environment. segment? And to XX% sales you paraphrasing, you if Siding the a growth annual about where when market wanted beyond potential but X% premise an for targets is that X% very and you revisit in growth. to maybe provided, Houlton expansion of thinking longer-term you're scenario longer-term of that sales gains

William Southern

provide in the was that addressable expecting -- for we're real-time what kind of us that nice tailwind, market spend, And R&R Sean, that. which market a single-family push I we haven't would the -- that sales If in -- increases across and so really tailwinds. which the rate market back me a were allow up interest existing mortgage we more. seeing tailwind see with part housing be certainly, Well, increased probably R&R we detail, and flat. and would the a certainly if the rates to construction, up if to higher a increases board, tailwind as had off would in even addressable the since spend, -- took where the mean, see I growth little got COVID drive recovery, would home which would lower of all year single-family along we market housing broader at let of get grow yes, would more us to than a we're

of the the more another I means revenue revenue, get that. result gives a little pricing you mean probably a also you in pressure that which on -- point maybe as Siding opportunity, pricing

X% R&R if Yes, a yes, X% market volume believe. and So I pricing, and above and on would. is, growth? market housing recovering to us to it would both allow stronger And question go help your

Alan J. Haughie

And about investments. just capacity to add a point

is Our that would in being to biggest Nashville that is late we party. fear --

we've happen to it be to convinced point, at that are going have the some capacity sure ready. that make and is because need got So we we to we

Operator

question Research coming from Ramsey will Steven Our of Group. Thompson be next

Steven Ramsey

a Maybe with file the order to different file guys ago the being this portfolio you about If start the early order makeup compared in now I'm to what encouraging. Siding you think the seeing were what XXXX. year SmartSide, of is compared and in is curious recall, a ago year to and if a between it's anything BuilderSeries telling you ago when ExpertFinish? year I

William Southern

versus the had than say strength the we would year the order we stronger shed quarter. have year this file last ago material quarter year in only thing seen that's other single-family is R&R geographically I in this the the what of pulls that was retail true first same interest. year. a last that, And if seeing we big than or QX in Other and of builder are with difference were consistent

Steven Ramsey

last That's And 'XX Is been an Or has that a ask it on it helpful. over to trajectory that last headwind as was another positive margins. increasing? kind trajectory X. or of This less of maybe there is assumption in Okay. XXXX? year than way on the it, it's in a even it then year stays margin secondly, Bath

Alan J. Haughie

progress not little. amount slow improving, a we're drag that XXXX, the same that But will at rate it's our assumed modeling in anyway. XXXX. and as by quite adding basically still guide of in may on but our that our That's We improving, a make in capacity definitely, we assumption kind but budgeting

Operator

Our Weintraub next Research Mark question of Partners. will be coming Seaport from

Mark Weintraub

Alan, First, of X clarification. point just

mix mix or the are are on building were -- that just we margin you price we should adjustments? still bridge, price from mentioned Siding like price list when you -- on Was So you talking flattish. X% still

Alan J. Haughie

don't What meant yes. to additional I closer that that mix benefit. yes, enjoyed something we this model year, was Yes, X%. I

underlying the increase yes, Yes. that. is exactly So price

Mark Weintraub

Got you.

Siding a spoke smooth driving going fills be help year, then had into items can share that maybe innovation drive $XX different? you and bit introduction, second, it do on market had some perhaps or let's talk So more Lennar, specifically more that, And to what we although side something that efforts. you we new you -- the demand last been HomeDepot, the how this are and get you've that little more. Maybe about million gains say, of are year creation -- the year through this and will

William Southern

to about by things would our booth and we new invite expansion interesting and look that Vegas anybody we there. also things come talked in coloring Well, board, at on products some that the have our new launched take some Las next but week a we've for prefinish, around really product

to Obviously, add smooth of full January nice in including portfolio this last of the having point, year, your a year compared time. to all is market at this

So -- innovation has been a key to come all off allocation. gotten the after we've growth we've gotten, particularly

as but the ExpertFinish talked work been before Builder that series of market growth, COVID, we've and has about, was Some phenomenal. done

to story sell. medium-sized And are easiest on with the certainly inroads play. that our builders, part a then is Alan and expanding far number we side, that So loyal continuing customers that's innovation a spend that's that and of marketing pushing addressable support and is your then a about as as continue will and large, small contractor in the around contractors talked initiative. of product, to how the in increase R&R installing have do customers, -- our the many And make part market because that growth play to increases have, both we big we customer big you

a steady and small selling a will there's to we rather percentage I constant execution mean lot that just of are a play never of North America, That's end. them. Siding in contractors

we're an just made. there do and it's huge by what encouraged progress encouraged execution that that. about And we've so is the opportunity learned annual localized to how we've that about I'm the

and we'll able that's us recognizable given the be distribution customers and install. well a to gain that continue the portfolio and a that's to beautiful brand to want repair want and strengthen products we of grow expertise, contractors remodel, as works of continue round out And create confidence that lot to in case of and

Mark Weintraub

had just lastly, know a get to efforts to of customer you've sense then inventories try underway better And where are. I

X you Do a currently? of customer now So and One, are be are process? are better do that have you sense where much where parts. where or feel in that you they Sidings and tend to inventories

William Southern

Yes.

year, we'll to look, on tend the it's are the February, where expect of but visibility spring over And we to the better inventory high be middle we the last visibility, want So which lot than of way a have little And couple better. is have we've we side season. years, a to selling had. anticipation build would never ever into distributors normal in gotten here of for coming the some in because perfect

it's days so -- are on the XX season but outside to and work. more -- our in and there's relation back the now relationship was get homebuilding in than normal for are the as to contractors given channel -- being ago, where And to able get we to busy there the season

cooperation So well. were distribution manage we're base pleased the that across increase through I'm the our year-end our price to we way with and with are. of pleased with where very able the as inventories

Operator

from will Capital question next of coming Markets. Matthew be RBC McKellar Our

Matthew McKellar

start Siding capacity like with lots slide, trough think capacity as Siding next you here, the this but cycle? investing about Siding and implies are through parts essentially recognize what Houlton would your for expansion am margins in complete in line this thinking I the you at how you'll looks as looking another at I Just moving you there that, work of correct

William Southern

that execution, team about Alan Aaron little in. on with He's I'll double then of a can a join and speculate margin can talk bit the execution. part

we it, not for XX completely time we projects, that's up parallel Siding required, certainly is of to running end which believe or first be XX doing X part going so, expansion we'll been years, the be I've So if overlapped. years

Houlton that. then second after start will pretty We going into move first, to but the one it's be intense. And

our but of more of We engineers, our for we've a it's past. of to our leads And that lot a engineering are staffing, given that. batch be a had scale a now, where will capability mode Alan well. continual work expansion to as are contract of XX% be exciting pretty versus executed group, as process with we being talked -- position in that from us increasing kind A in in-house the in anticipation about, growth

part provides continuity that with good expertise, are good that a those expansions. big So vendors continuity of on

then expansion So And that after on be that, decision where or have and specifically a the talking yes, second next the capacity we'll about soon. starting made Houlton shortly goes.

and As we the obviously, opportunities comments, And both options future we will have a that today. impact both tariff Canada U.S. on have those just and -- narrowing prepared options, the mentioned situation in lot in options decision, because have we're of in or an we in I'll

Alan J. Haughie

Thank risk right. out Brad. limb. All The going a on of you,

from dissimilar to closer throes I not it the margin this is see be think why we're why headwind that conversation the additional we're hell think margin rising these again, will be the comes of of might likely having you absorbing, additional one when this sort It's op to a are more falling? to that in as expansion. to expansion. with -- margins, Having I of more parallel us the but they growth opposed about likely benefits --

a where has minimum like would to point a of sort believe but that's scale our rising sign -- has I higher before. reached So wave than that

Matthew McKellar

Great.

for with to investment me, plans one your the in thinking capacity Bay. just Next Green and sticking

Aside other cost you to potential in from how automation investments we about your thinking and particular shown the should on slide, capacity incremental think the through hope improvements opportunities savings? about drive

William Southern

doing fast Let we basically mentioned. work. you and me that the out remarkable prefinished start prefinish advancing, on It's look, is technology as just dunk how started

a lot ExpertFinish. of and investment in to opportunity throughput we're increase us and get doing that was there certainly and automation, So for better

it's little we've so that been see gains has maybe technology significant we've because able really to us, the advanced a efficiency good been delay much bit And -- as added the has somewhat for been capacity.

So I scale that business. way more the think there's ExpertFinish on to side to continue as we come

finishing business, bit and increment opportunity -- labor operation, not significantly add have around we of gain. We standpoint, cases the a on there's more in our safety do prefinished efficient side relatively manufacturing be automation high more efficiency to press which of are active and highly tends and little be the from in of though our projects we hands-on. labor-intensive quite average big That's that small capacity the of picture that a more still every will than

technology That well, the advancing is particularly packaging area. as in

there. opportunities we so see And

margins though, effort. I mill really the period of most one Siding just converted. entire what's is obvious I'll for just those will gets of footprint maybe Houlton the less production after saying of overall be us production an continuous line I close line for opportunity could this but at almost that think for to be time part time, an know improvement by any second versus the And -- give more us -- an first to designing one see then things, that exciting to

most it's And of have X current with existing almost greenfield will but in at will even one some element after location siding mill. if -- that like a an the Houlton of probably be it, Line a that

on will but design OSB the capital And want versus production for could the efficiencies the so it the mill specifically opportunity be the an us pretty for more that footprint is in design to of be forcing existing mill entire in and intensive, interesting. Siding to we opportunity

So more I comes another full when learn that we change facility at an that see as do about for it in opportunity that, at least to at online come production. as but step margin,

Operator

of coming D.A. Kurt question Davidson. next be will from Yinger Our

Kurt Yinger

larger business on ramped kind you wanted I executed has are continue space? surprises can you in just any leverage curious circle has that that learnings as pursue the of against other -- big there to Lennar, and If builders to and to agreement. been back and you've look the there I'm as or take any

William Southern

what the Lennar their to of the as sure Siding but way. been technically that trained do Not really or this beautiful learning guess is contractor base business. good a is learning. any I very I at first with course a normal a install surprises. as surprised our been that making It's is mean and in not more efficient we've us, able a up, time And it planned, less executed they

call technical this And has that of we them, not now conversion, so quickly their win around place and becomes it developments. play let's that sure part builder have to for an it making for part. in support local the And is the that selling we that serve the educating then execution -- a battle business, key is to the but for that's process understand gone base distribution with been our to the significant in every of on installer one procurement

some And true business from builders in. garnered there were we've Lennar where that that with not cases won of we that and the other was

for get execution big you once course, an is it us. was Lennar of So agreement. And a one the game

certainly learnings well for will into translate how that we approach there the area. in opportunities So future

Kurt Yinger

to bigger the installation how as kind of just that, some like would technical of installation in be grow Is it important of base contractor fair the that conversion little contractor think convert given these bit whatnot? and is is a you scale easier or builders, I details of mean, more and training next naturally aware because you that

William Southern

of Every No doubt. and both product install up The cast that of as to we the the installers that a our both had get, the our of the where how contractor new strength R&R depending product. we train wider we for and evidence our knows the by And is believe because on have become net And they we advocates locally. there's construction. in ease installation. opportunity way, to do market now contractor,

a there. And stickiness there's so

business, and distribution, new also open historic money construction new into and But has And us. for this we off the as that product. our R&R translates then makes been -- both channel grow the up

creates so loyalty overall the the and sell And wants, that one just strengthen that effort our convert to contractor the you the in beyond one but or framework contractor builder going does deal it work what side. of of that that we're R&R case the on some

scale also base we're on the scale the valuable than more mentioned and we distribution scale building build mean, I I contractor operations probably So with is side. for ExpertFinish, building the but

Operator

coming our George of Staphos next Bank be America And from Securities. question of will

George Staphos

the product, to does needs you're like a fine. but it now of the the at recognizing to make next scale more any come or But Given the SmartSide, the much -- something of the this advertising the a doesn't marketing changes, working change right success working just does where sale installer sound and it's horizon the advertising and because ever or in acceptance years? been like play national with that's to time X change you into of technical need maybe come in X that there on

William Southern

selling repeat. investment on force, our X the I being won't ground what selling, the -- having I product which boots that technical and is X every us Yes. what's in day supporting so our would on to sales next been for say, having George, years, for our -- and increasing for discussion working we're actively with folks the sales

local where that then And really we had distribution, using do consumer on in where contractors markets we're advertising have where areas we've the on but have doing level -- we've places from standpoint, success that R&R gone in And creating where more basis and at local then board. local is we are focused media. an and into a we local

let's say, results. that good really, groundwork, we with follow then that And foundation seeing marketing, really focused local we're

I on national selling, awareness local brand the value, more is changed, local think over there more opinions my but but have than the is on of -- changed, more return selling, market I'm this so has do a local And years that programs. there's

it branding be That's seen But we national a my of with like opportunity. accelerate we I that. results and with of personal and changed that But -- been otherwise locally, evidence can what really doing view. something could the it's growth as more executed we've we're

George Staphos

And you meet it's and it at And demand. the the with your to produce working. have to same time, stage ability

sorry, there? mean, I'm I that comment -- Alan, all is have sense. no, you do makes that So a

Alan J. Haughie

you. No, with [indiscernible]

George Staphos

Yes.

good. Sounds

such what of line, maybe versus terms that what producing around you terms to if in And or we've per are inflation of the start have times capacity to seeing orders maybe seen what the square need feet? are be next X,XXX place you in dealers? equipment actually press of the going you're the past In lead kind the to XXXX, to not, in

William Southern

Yes.

what we parts for started We've both just our securing Houlton let me comment orders we're road. on need give pieces equipment kind Aaron actually down for at of on could location Line begun. we're then or X where and So we kind a what of has to agnostic, seeing that and at and do for us the place that comment of

time approval the factory Board and time for approval, fabrication Houlton, to the preliminary beginning fabrication we've the let's steel gotten We've the pre-buys, approval it, cases, from the some equipment. preliminary and call from or securing Board in got the of start

So has that started.

projects Aaron do would to than significantly to and has of I this over in seeing inflationary one. now couple specifics And the the projects issues the more think inflationary more mill Sagola Houlton, I there We're we're conversions, past other The compared say, these been But impact not is significant to of normal. more expensive. are we X what seeing. where on speak and what it pre-COVID can then costs increases

Aaron Howald

factor, of but is changing. Inflation the are certainly nature the Yes. projects a also

plants. So of existing Houlton X Sagola were Houlton is an The and expansion. conversions Line

converting So not we're adding press. press, a we're actually a

drive products some the nature changes So the projects the the can in of also, themselves total of the cost. nature

price. Siding is inflating that's thing other the Fortunately,

mills. up, those returns the for that but So producing cost stay go got healthy projects the we're the power pricing product at very we've the specialized of because

and the are lead time agnostic. of In Brad longer timing, site said, as items terms of some

several if so that And historical capacity grow extended time confident capacity for there's we've not that years amount makes another that some capacity a the managed risk because of we'll volume huge seen order minimize in CAGR to production specialized period we these that And past continue the a we over it ready pretty file. pieces equipment. have of the now of secure to that with sense of of we're

George Staphos

maintenance, in shed you it it should is remind little -- would then any considering out on take margin cadence bit impact year, trend Understood. and a of basis modeling are questions, off me, would -- factor, can the a out, wouldn't My we that And points call maybe the but be is over. we're I'll specific because you mix? factors didn't more of turn quarters? terms growing quickly it of it there as of few margin be this it a X then kind I with last expect any really

William Southern

Yes.

average lower be average the -- that tends margin. lower it On shed, to would than than price be but not

hit, So a hit. we'd but margin see a it's not pricing

heaviest in and the As always, spending, maintenance of projects George. terms QX will be

Aaron Howald

a got a few than we've they're OSB not business, Siding normal, that maybe here in the And but little are Yes. larger business. projects the

the being see So of a projects large margin a in this maintenance source year. pervasion Siding you won't

William Southern

on Knock wood.

Aaron Howald

Knock on wood.

Operator

And I'm like now for showing closing the would remarks. I questions. further no to Aaron turn conference now to back

Aaron Howald

joining in see for next everyone, driving some With XXXX. we'll week questions, see that talking come further our end Stay us. and no you, us Thank we about there. in the Okay. the Vegas and safe, and growth new call were of products

Operator

this And conference today's concludes Thank call. you for participating.

now disconnect. may You

Louisiana-Pacific (LPX) 19 Feb 252024 Q4 Earnings call transcript