Louisiana-Pacific Q3 Results Exceed Street Expectation; CEO Says 'We Believe Siding Inventories Have Normalized'

Louisiana-Pacific Corp LPX reported third-quarter FY23 net sales of 728 million, beating the consensus of $727.17 million, but marking a decline of 14.6% year-on-year.

Siding Net sales decreased by 13% Y/Y to $345 million on lower volumes partially offset by higher prices. Oriented Strand Board (OSB) Net sales decreased by 14% to $335 million.

"As expected, Siding sales volume, price, and net sales all increased sequentially compared to the second quarter, and we believe Siding inventories have normalized," said Brad Southern, Chair and Chief Executive Officer.

Adjusted EPS was $1.62, down from $1.72 in 3Q22, beating the consensus of $1.53.

The gross profit fell 7.8% Y/Y to $214 million, while the margin expanded by 217 bps to 29.4%. Operating margin from continuing operations expanded by 107 bps to 16.2%.

Adjusted EBITDA was $190M (-5% Y/Y), and the margin was 26.1%, up 262 bps YoY.

Net cash provided by operating activities for the quarter totaled $187 million compared to $195 million a year ago.

Cash and cash equivalents totaled $160 million at the end of the quarter, and borrowing availability under the revolving credit facility was $550 million, resulting in total liquidity of ~$710 million for the company.

For 4Q23, LPX Sees OSB's Net Sales Decline Sequentially By ~30% and Expects Adjusted EBITDA Of $60 million-$80 million.

FY23 Outlook: Siding Solutions revenue is expected to decrease by ~10% YoY; capital expenditures are expected to be in the range of $280 million to $295 million,

Price Action: LPX shares were trading 4.1% higher at $53.39 at the last check Wednesday.

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