Louisiana-Pacific Corporation LPX, or LP, reported impressive first-quarter 2024 results. Earnings and net sales beat their respective Zacks Consensus Estimate and increased on a year-over-year basis.
LPX’s shares soared 20.8% during the trading session on May 8, 2024.
The impressive first-quarter 2024 performance was primarily propelled by several key factors. Notably, there was a notable surge in demand for Siding and OSB, highlighted by a significant increase in volume. Record-breaking volumes for ExpertFinish and BuilderSeries were achieved, underscoring the robust market appetite. Moreover, higher commodity prices and enhanced operational efficiency played pivotal roles in driving margin expansion during this period. Despite lingering macroeconomic uncertainties, the steadfast demand for SmartSide and Structural Solutions has persisted into the second quarter, further bolstering the positive outlook. Consequently, LPX is confidently revising its projections upward for both the second quarter and the entire fiscal year, reflecting the substantial momentum derived from these driving forces.
Detailed Discussion
Louisiana-Pacific reported adjusted earnings per share (EPS) of $1.53, beating the Zacks Consensus Estimate of $1.13 by 35.4%. The bottom line increased 350% from the year-ago quarter’s reported figure of 34 cents on the back of strong adjusted EBITDA.
Net sales of $724 beat the consensus estimate of $677 million by 7% and grew 24% from the prior-year figure, owing to solid Siding and OSB sales.
Adjusted EBITDA of $182 million was up 175.8% from the prior-year quarter’s level, backed by higher OSB selling prices and a decrease in inflationary costs (including freight, raw materials, and labor).
Louisiana-Pacific Corporation Price, Consensus and EPS Surprise
Louisiana-Pacific Corporation price-consensus-eps-surprise-chart | Louisiana-Pacific Corporation Quote
Segmental Analysis
Siding: The segment’s sales of $361 million were up 9% from the prior-year period. A 5% rise in the average net selling price (ASP) and a 4% increase in volume from prior-year levels led to the improvement.
Adjusted EBITDA came in at $90 million, a 34% increase from $67 million reported a year ago. The growth was attributable to higher net sales accompanied by a decrease in costs, including freight, raw materials, and labor. These were partially offset by an increase in mill overhead.
OSB: Sales in the segment increased 65% year over year to $313 million, owing to a rise in OSB prices of 24% and 49% in structural solutions and commodities, respectively. Also, higher shipments in OSB-Structural Solutions by 36% and OSB-Commodity by 9% led to the growth.
The company’s adjusted EBITDA grew a whopping 1,829% year over year to $90 million, given higher OSB prices and sales volumes, partially offset by higher mill-related costs.
LP South America (LPSA): Sales of $47 million decreased 15% due to lower ASPs in OSB-Structural Solutions by 19% and Siding by 14% in the first quarter. Adjusted EBITDA plunged 19% from the year-ago quarter to $10 million due to lower ASPs and unfavorable currency fluctuations, partially offset by lower raw material costs.
Financials
At the first quarter of 2024-end, LP had $800 million in liquidity. As of Mar 31, 2024, Louisiana-Pacific had cash and cash equivalents of $244 million compared with $222 million at 2023-end. Long-term debt was $347 million, which aligned with the 2023-end level.
In the first quarter, net cash provided by operations was $105 million versus $119 million of cash used in operating activities reported a year ago.
In the year-to-date period that ended May 8, 2024, LP has allocated $50 million toward repurchasing 0.6 million common shares. Within this timeframe, $13 million was utilized for repurchases during the three months that ended Mar 31, 2024. Consequently, $150 million remains available under the pre-existing share repurchase program authorized in May 2022. Additionally, there has been an authorization of an additional $250 million for the repurchase of LP common stock, thereby increasing the total authorized amount for stock repurchases to $400 million as of May 8, 2024.
Guidance
For the second quarter of 2024, the company expects Siding Solutions’ revenues to grow 20-25% from the year-ago period. It anticipates a consolidated adjusted EBITDA of $220-$240 million, of this, $95-$105 million is likely to be contributed by Siding, and $125-$135 million is likely to be added by OSB.
For 2024, the company now expects Siding Solutions’ revenues to rise 11-13% from 2023 versus an earlier projection of 8-10%. LPX now projects a consolidated adjusted EBITDA of $655-$685 million, of this, $340-$360 million is likely to be contributed by Siding, and $315-$325 million is likely to be added by OSB. Earlier, LPX had expected a consolidated adjusted EBITDA of $495-$525 million, of this, $280-$300 million was from Siding, and $215-$225 million from OSB.
LPX still anticipates capital expenditures between $200 million and $220 million.
Zacks Rank & Recent Construction Releases
Louisiana-Pacific currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
UFP Industries, Inc. UFPI reported mixed results for the first quarter of 2024. Earnings beat the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
UFPI’s adjusted EBITDA of $180.8 million declined 10.5% year over year. Adjusted EBITDA margin also contracted 10 bps from the prior year to 11%.
Boise Cascade Company BCC reported solid first-quarter 2024 results, wherein earnings and sales topped the Zacks Consensus Estimate and increased year over year. The uptrend in the company’s results was attributable to the seasonal tailwinds and strength in new single-family housing starts, resulting in sales volume growth. These factors aided the increased contributions from BCC’s two reportable segments.
BCC remains optimistic about the increasing trajectory of single-family housing starts, given the low supply of existing single-family homes, as this metric is the key driver of its sales. Also, it aims to effectively allocate its capital and ensure shareholder value, along with fostering its growth.
Owens Corning OC reported impressive results in first-quarter 2024, with earnings and net sales surpassing the Zacks Consensus Estimate. Earnings increased on a year-over-year basis despite a net sales decline. Sales declined due to lower sales volumes in the Insulation and Composites segments.
For the second quarter of 2024, Owens Corning expects net sales to be in line with the second quarter of 2023 while generating approximately 20% EBIT margins.
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