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Louisiana-Pacific Posts Loss in Q4, Rev Beats


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Louisiana-Pacific Corporation (LPX - Snapshot Report) reported fourth-quarter 2013 adjusted loss per share of 5 cents per share compared to the Zacks Consensus Estimate of earnings of 5 cents. The quarterly loss was also a massive drop from the year-ago quarter’s earnings of 18 cents.

Despite strong revenues, the bottom line underperformed due to a massive $2 million loss from foreign exchange, lower pricing in Oriental Strand Board (OSB) and lower earnings before interest, taxes, depreciation and amortization (EBITDA).
Net sales in the quarter increased 6.0% year over year to $480 million driven by rise in volume and prices across all segments, except the OSB segment. Revenues beat the Zacks Consensus Estimate of $472 million by 1.7%.

Adjusted EBITDA from continuing operations declined 66.2% from the prior-year quarter to $24 million owing to a rise in operating costs and decline in OSB segment EBITDA due to lower prices. The company recorded adjusted operating income of $129 million,

Segmental Analysis

OSB: The OSB segment manufactures and distributes OSB structural panel products. Louisiana-Pacific had seven operating facilities but had to close three due to difficult economic conditions.

Sales in the OSB segment decreased 5% year over year to $230 million in the fourth quarter of 2013, due to a 20% decline in pricing, partially offset by a 17% increase in volume. Volumes increased as the company resumed production at the Dawson Creek, British Columbia mill and the Clarke County, Alabama mill. The segment recorded adjusted EBITDA of $23 million, down 66.2% year over year attributable to lower pricing.

Composite Wood Products/Siding: The Composite Wood Products/Siding segment is engaged in the production and marketing of siding products and related accessories, hardboard siding and accessory products, and vinyl siding products and accessories. These products are used for new constructions as well as for repair and remodeling. It has three categories: SmartSide and CanExel siding products and commodity OSB.

Sales in the Siding segment improved 19% year over year to $138 million gaining from the rise in pricing as well as volumes in the SmartSide category. With continuous penetration in retail, repair and remodel markets and sheds, SmartSide volumes improved 20% year over year. SmartSide average sales prices also increased 4% year over year.

On the other hand, CanExel siding prices remained flat year over year. CanExel volumes were down 9% due to higher sales and marketing expenses and increased cost of raw materials, license and over lays.

The segment recorded adjusted EBITDA of $20 million in the quarter, up 33.3% year over year, driven by higher sales partially offset by lower OSB pricing.

Engineered Wood Products (EWP): The EWP segment produces goods used in new constructions like I-Joist (IJ), Laminated Veneer Lumber (LVL) and Laminated Strand Lumber (LSL).

Engineered Wood Products sales increased 39% year over year to $72 million in the quarter, driven mostly by higher volume growth in IJ, LVL and LSL. Volumes of IJ increased 36% year over year and 24% for both LVL and LSL, benefiting from higher LSL sales.

Pricing was up 8% in IJ and 3% in both LVL and LSL due to price increases across all product lines offsetting the increased raw material costs. The segment’s adjusted EBITDA broke even, compared to a negative adjusted EBITDA in the prior-year quarter, as increased pricing offset higher raw material costs.

South America Segment: The segment produces OSB structural panel and siding products in Chile and Brazil.

Segment sales reduced 3% year over year to $41 million. Including the changes in foreign exchange rates, prices decreased 6% year over year in Chile but increased 2% in Brazil. In terms of local currency, prices improved 6% in Chile and 2% in Brazil.

Full Year 2013

Louisiana-Pacific Corporation’s fiscal 2013 adjusted earnings per share from continuing operations of 90 cents missed the Zacks Consensus Estimate of $1.02 by 11.8%. Full year earnings however increased 157.1% from the year-ago earnings of 35 cents.
Net sales increased 23.5% year over year to $2.1 billion driven by rise in volume and prices across all segments, except the OSB segment.
Louisiana-Pacific currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the sector include Universal Forest Products Inc. (UFPI - Analyst Report) with a Zacks Rank #1 (Strong Buy) and Potlatch Corporation (PCH - Snapshot Report) and Weyerhaeuser Co. (WY - Analyst Report) with a Zacks Rank #2 (Buy).

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