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Why Is Louisiana-Pacific (LPX) Down 7.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Louisiana-Pacific due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Louisiana-Pacific Q2 Earnings & Sales Miss
Louisiana-Pacific Corporation or LP reported lackluster results for second-quarter 2022. Both the top and the bottom line missed their respective Zacks Consensus Estimate and decreased on a year-over-year basis.
LP chairman and CEO Brad Southern, stated, "Despite ongoing raw material inflation and logistics challenges, LP's teams consistently executed our strategy to meet sustained customer demand. The new Siding mill in Houlton, Maine, is ramping up ahead of schedule, and contributed to Siding reaching a quarterly sales record of $356 million. With Structural Solutions mix exceeding 50% for the first six months of 2022, we believe LP is now the leading producer of specialty OSB, offering the widest array of specialty OSB building solutions."
On Aug 1, LPX completed the sale of the Engineered Wood Products (EWP) segment. Second-quarter results reflect the EWP segment as discontinued operations.
Detailed Discussion
Louisiana-Pacific reported adjusted earnings of $4.19 per share, missing the Zacks Consensus Estimate of $4.38 by 4.3%. The bottom line declined 9.5% from the year-ago quarter’s reported figure of $4.63 per share.
Net sales of $1.13 billion also lagged the consensus estimate of $1.26 billion by 10.5% and declined 3% from the year-ago period.
Single-family housing starts fell 3.2% year over year, but multi-family starts rose 19.8%.
Segmental Analysis
Siding: The segment’s sales of $358 million were up 23% from the prior-year period. A 24% increase in Siding Solutions (formerly known as SmartSide) revenues, backed by a 12% rise in average net selling price and a 10% increased volume from the prior-year levels. The average net selling price benefited from list price increases and an improved mix of innovative products. Volume increased on the back of the pre-scheduled production ramp-up of the Houlton facility.
Adjusted EBITDA inched up slightly to $78 million. Price and volume growth was offset by raw material and freight inflation and discretionary investments, including siding mill conversions and sales and marketing costs.
OSB: Sales in the segment decreased 14% year over year to $673 million, owing to 22% lower OSB prices. Volume increased 10%, driven by the Peace Valley mill restart. The company’s adjusted EBITDA fell 29% year over year to $403 million due to lower prices and increased raw material inflation.
South America: Sales of $70 million rose 5% and adjusted EBITDA declined 23% from the year-ago quarter to $26 million due to 6% lower sales volume.
Operating Highlights
The gross margin contracted to 45.8% from 58.6% reported a year ago. Adjusted EBITDA of $491 million was down 26.2% from the prior year’s figure of $665 million.
Financials
As of Jun 30, 2022, Louisiana-Pacific had cash and cash equivalents of $503 million compared with $358 million at the 2021-end. Long-term debt was in line with the 2021-level of $346 million.
For the second quarter, net cash provided by operations was $483 million, up from $457 million reported in the year-ago period.
Guidance
For third-quarter 2022, the company expects Siding Solutions revenue growth to be 20% from the year-ago period. OSB revenues are expected to be sequentially low by 40% (based on Random Lengths’ report published on Aug 5, 2022). It anticipates a consolidated adjusted EBITDA of $200 million.
For 2022, Louisiana-Pacific expects Siding Solutions revenue growth of more than 20%. Also, the company projects capital expenditures for 2022 to be $400-$430 million, indicating an increase from $254 million in 2021.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -23.38% due to these changes.
VGM Scores
Currently, Louisiana-Pacific has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Louisiana-Pacific has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Louisiana-Pacific (LPX) Down 7.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Louisiana-Pacific due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Louisiana-Pacific Q2 Earnings & Sales Miss
Louisiana-Pacific Corporation or LP reported lackluster results for second-quarter 2022. Both the top and the bottom line missed their respective Zacks Consensus Estimate and decreased on a year-over-year basis.
LP chairman and CEO Brad Southern, stated, "Despite ongoing raw material inflation and logistics challenges, LP's teams consistently executed our strategy to meet sustained customer demand. The new Siding mill in Houlton, Maine, is ramping up ahead of schedule, and contributed to Siding reaching a quarterly sales record of $356 million. With Structural Solutions mix exceeding 50% for the first six months of 2022, we believe LP is now the leading producer of specialty OSB, offering the widest array of specialty OSB building solutions."
On Aug 1, LPX completed the sale of the Engineered Wood Products (EWP) segment. Second-quarter results reflect the EWP segment as discontinued operations.
Detailed Discussion
Louisiana-Pacific reported adjusted earnings of $4.19 per share, missing the Zacks Consensus Estimate of $4.38 by 4.3%. The bottom line declined 9.5% from the year-ago quarter’s reported figure of $4.63 per share.
Net sales of $1.13 billion also lagged the consensus estimate of $1.26 billion by 10.5% and declined 3% from the year-ago period.
Single-family housing starts fell 3.2% year over year, but multi-family starts rose 19.8%.
Segmental Analysis
Siding: The segment’s sales of $358 million were up 23% from the prior-year period. A 24% increase in Siding Solutions (formerly known as SmartSide) revenues, backed by a 12% rise in average net selling price and a 10% increased volume from the prior-year levels. The average net selling price benefited from list price increases and an improved mix of innovative products. Volume increased on the back of the pre-scheduled production ramp-up of the Houlton facility.
Adjusted EBITDA inched up slightly to $78 million. Price and volume growth was offset by raw material and freight inflation and discretionary investments, including siding mill conversions and sales and marketing costs.
OSB: Sales in the segment decreased 14% year over year to $673 million, owing to 22% lower OSB prices. Volume increased 10%, driven by the Peace Valley mill restart. The company’s adjusted EBITDA fell 29% year over year to $403 million due to lower prices and increased raw material inflation.
South America: Sales of $70 million rose 5% and adjusted EBITDA declined 23% from the year-ago quarter to $26 million due to 6% lower sales volume.
Operating Highlights
The gross margin contracted to 45.8% from 58.6% reported a year ago. Adjusted EBITDA of $491 million was down 26.2% from the prior year’s figure of $665 million.
Financials
As of Jun 30, 2022, Louisiana-Pacific had cash and cash equivalents of $503 million compared with $358 million at the 2021-end. Long-term debt was in line with the 2021-level of $346 million.
For the second quarter, net cash provided by operations was $483 million, up from $457 million reported in the year-ago period.
Guidance
For third-quarter 2022, the company expects Siding Solutions revenue growth to be 20% from the year-ago period. OSB revenues are expected to be sequentially low by 40% (based on Random Lengths’ report published on Aug 5, 2022). It anticipates a consolidated adjusted EBITDA of $200 million.
For 2022, Louisiana-Pacific expects Siding Solutions revenue growth of more than 20%. Also, the company projects capital expenditures for 2022 to be $400-$430 million, indicating an increase from $254 million in 2021.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -23.38% due to these changes.
VGM Scores
Currently, Louisiana-Pacific has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Louisiana-Pacific has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.