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Louisiana-Pacific Corporation (LPX - Free Report) reported adjusted earnings per share of 28 cents in the second quarter of 2016, beating the Zacks Consensus Estimate of 25 cents by 12%. The bottom line improved significantly from the prior year quarter earnings of 7 cents per share, driven by strong revenues and adjusted EBITDA.
Net sales of $582 million in the quarter surpassed the Zacks Consensus Estimate of $568 million by 2.53%. Net sales increased 18.1% year over year, as revenue increased across all the segments.
Adjusted EBITDA from continuing operations was $98.9 million in the quarter compared with adjusted EBITDA of $16.2 million in the prior-year quarter.
Segmental Analysis
Oriented Strand Board : Sales at the OSB segment increased 19.8% year over year to $252.8 million on the back of 30% growth in pricing, partially offset by a 7% decrease in volume. Volumes declined due to conversion of the Swan mill to Siding mill.
The segment recorded adjusted EBITDA of $59 million as against negative EBITDA of $3.7 million in the year-ago quarter, owing to an increase in selling price.
Siding Segment: The Siding segment manufactures products under two categories: SmartSide siding products and related accessories, and CanExel siding and other related accessories.
Sales at the Siding segment increased 26.4% year over year to $207.2 million on the back of an increase in volumes of SmartSide and CanExcel.
SmartSide volume improved 22%, though sales price in SmartSide declined 2%, owing to an unfavorable change in product mix.
CanExcel volume improved 24% on the back of strong demand in Europe. However, sales price in CanExcel declined 3% in U.S dollar, owing to an unfavorable Canadian dollar. However, CanExel Canadian dollar sales price increased 2%.
During the quarter, the Siding segment recorded adjusted EBITDA of $49 million, up 42% from the prior year quarter.
Engineered Wood Products (EWP): The EWP segment makes I-Joists, laminated veneer lumber (LVL) and laminated strand lumber (LSL). These products are used in residential and commercial flooring and roofing systems.
Engineered Wood Products sales jumped 8.3% year over year to $78 million in the quarter. Volumes of IJ increased 3%, while for both LVL and LSL volumes tanked 13%.
Pricing for LVL was up 6%, while that for IJ grew 5%. Adjusted EBITDA increased 550% to $3.9 million during the quarter.
South America: Segment sales rose 5.9% year over year to $41 million owing to higher volume in Chile. Adjusted EBITDA increased 122% to $9.1 million during the quarter.
Volumes in Chile increased 14%. Volumes in Brazil remained flat due to decreased local sales as Brazil continues to witness an economic recession. However, pricing was flat in Chile but increased 4% in Brazil. Nevertheless, in local currency, pricing in Chile and Brazil was up 10% and 20%, respectively.
Louisiana-Pacific is optimistic about witnessing improving demand for its products over the near term, which will be driven by an increase in building construction activities, repair/ remodeling activity and formation of new households.
Louisiana-Pacific sports a Zacks Rank #1 (Strong Buy).
Key Picks from the Sector
Some stocks in the building/construction sector that are worth considering include Norbord, Inc. , Universal Forest Products Inc. (UFPI - Free Report) and Potlatch Corporation (PCH - Free Report) . All the three companies carry a Zacks Rank #1.
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Louisiana-Pacific (LPX) Q2 Earnings & Sales Beat Estimates
Louisiana-Pacific Corporation (LPX - Free Report) reported adjusted earnings per share of 28 cents in the second quarter of 2016, beating the Zacks Consensus Estimate of 25 cents by 12%. The bottom line improved significantly from the prior year quarter earnings of 7 cents per share, driven by strong revenues and adjusted EBITDA.
Net sales of $582 million in the quarter surpassed the Zacks Consensus Estimate of $568 million by 2.53%. Net sales increased 18.1% year over year, as revenue increased across all the segments.
Adjusted EBITDA from continuing operations was $98.9 million in the quarter compared with adjusted EBITDA of $16.2 million in the prior-year quarter.
Segmental Analysis
Oriented Strand Board : Sales at the OSB segment increased 19.8% year over year to $252.8 million on the back of 30% growth in pricing, partially offset by a 7% decrease in volume. Volumes declined due to conversion of the Swan mill to Siding mill.
The segment recorded adjusted EBITDA of $59 million as against negative EBITDA of $3.7 million in the year-ago quarter, owing to an increase in selling price.
Siding Segment: The Siding segment manufactures products under two categories: SmartSide siding products and related accessories, and CanExel siding and other related accessories.
Sales at the Siding segment increased 26.4% year over year to $207.2 million on the back of an increase in volumes of SmartSide and CanExcel.
SmartSide volume improved 22%, though sales price in SmartSide declined 2%, owing to an unfavorable change in product mix.
CanExcel volume improved 24% on the back of strong demand in Europe. However, sales price in CanExcel declined 3% in U.S dollar, owing to an unfavorable Canadian dollar. However, CanExel Canadian dollar sales price increased 2%.
During the quarter, the Siding segment recorded adjusted EBITDA of $49 million, up 42% from the prior year quarter.
Engineered Wood Products (EWP): The EWP segment makes I-Joists, laminated veneer lumber (LVL) and laminated strand lumber (LSL). These products are used in residential and commercial flooring and roofing systems.
Engineered Wood Products sales jumped 8.3% year over year to $78 million in the quarter. Volumes of IJ increased 3%, while for both LVL and LSL volumes tanked 13%.
Pricing for LVL was up 6%, while that for IJ grew 5%. Adjusted EBITDA increased 550% to $3.9 million during the quarter.
South America: Segment sales rose 5.9% year over year to $41 million owing to higher volume in Chile. Adjusted EBITDA increased 122% to $9.1 million during the quarter.
Volumes in Chile increased 14%. Volumes in Brazil remained flat due to decreased local sales as Brazil continues to witness an economic recession. However, pricing was flat in Chile but increased 4% in Brazil. Nevertheless, in local currency, pricing in Chile and Brazil was up 10% and 20%, respectively.
LOUISIANA PAC Price, Consensus and EPS Surprise
LOUISIANA PAC Price, Consensus and EPS Surprise | LOUISIANA PAC Quote
Outlook
Louisiana-Pacific is optimistic about witnessing improving demand for its products over the near term, which will be driven by an increase in building construction activities, repair/ remodeling activity and formation of new households.
Louisiana-Pacific sports a Zacks Rank #1 (Strong Buy).
Key Picks from the Sector
Some stocks in the building/construction sector that are worth considering include Norbord, Inc. , Universal Forest Products Inc. (UFPI - Free Report) and Potlatch Corporation (PCH - Free Report) . All the three companies carry a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>