Louisiana-Pacific Corporation’s (LPX - Free Report) shares gained nearly 4% on Feb 11, despite reporting lower-than-expected results in fourth-quarter 2019. Better-than-expected SmartSide Strand revenue growth and its long-term adjusted EBITDA projection might have boosted investors’ sentiments. Also, the company’s announcement of a 7% increase in quarterly cash dividend to 14.5 cents per share and authorization of a new $200-million share repurchase program are expected to have added to the positives.
The company reported adjusted earnings of 5 cents per share, which lagged the Zacks Consensus Estimate of 10 cents by 50% and declined a whopping 73.4% from the year-ago period. The downside can be attributed to lower sales, and higher costs and expenses.
Net sales totaled $537 million, missing the consensus estimate of $552 million by 2.7% and declining from the year-ago figure of $589 million by 8.8%. Lower Oriented Strand Board (“OSB”) prices and reduced commodity OSB shipments across all North America segments (down 29%) negatively impacted its performance. However, these headwinds were partially offset by SmartSide Strand revenue growth of 11%.
Louisiana-Pacific Corporation Price, Consensus and EPS Surprise
Segmental Analysis
Siding: The segment’s sales of $230 million during the quarter were up 8% from the prior-year figure of $213 million. Adjusted EBITDA also increased 23.5% from the prior-year quarter to $42 million. The upside was backed by strong SmartSide Strand.
OSB: Sales in the segment declined 32.5% year over year to $172 million. The company’s adjusted EBITDA also deteriorated significantly to $6 million from $34 million reported a year ago. Increase in the Structural Solutions mix was more than offset by lower OSB pricing and shipments.
Engineered Wood Products or EWP: Segment’s sales grew 16.3% year over year to $93 million. The upside was backed by the temporary shutdown of its North Carolina facility in 2018 owing to damage caused by hurricane. Adjusted EBITDA also increased year over year to $3 million, primarily due to an increase in joint venture earnings and operational efficiency.
South America: Sales of $38 million decreased 2.6% year over year due to pricing pressure from increased competition in export markets in South America and Asia, partially offset by higher Chilean shipments. Adjusted EBITDA of $8 million was on par with the year-ago quarter.
Operating Highlights
Gross margin declined nearly 300 basis points (bps) year over year to 13%. Selling, general and administrative expenses — as a percentage of revenues — increased 110 bps.
Adjusted EBITDA from continuing operations was $49 million in the quarter, down 25% from the prior-year figure of $65 million. Adjusted EBITDA margin also contracted nearly 200 bps to 9.1%.
Financials
As of Dec 31, 2019, Louisiana-Pacific had cash and cash equivalents of $181 million compared with $878 million at the end of 2018. Long-term debt (excluding current portion) of $348 million slightly increased from the 2018-end level of $347 million.
At the end of 2019, net cash provided by operations was $159 million compared with $511 million in the comparable year-ago period.
2019 Highlights
In 2019, Louisiana-Pacific reported adjusted earnings of 37 cents per share, missing the consensus mark of 42 cents and declining 86.5% from the 2018 level of $2.75. Net sales of $2.31 billion also declined 18.3% year over year and slightly missed analysts’ expectation of $2.33 billion. Adjusted EBITDA also declined 68.3% from a year ago.
2020 View & Strategic Update
Based on current plans and expectations, Louisiana-Pacific expects capital expenditure in the range of $130-$140 million. SmartSide Strand revenue growth is targeted within 10-12% for 2020.
Notably, the company remains optimistic to fulfill its long-term adjusted EBITDA growth (through 2021) expectation of $165 million and expects EBITDA margins to be at least 20% in the Siding segment.
Zacks Rank & Peer Release
Louisiana-Pacific, which shares space with Norbord Inc. and Universal Forest Products Inc. (UFPI - Free Report) in the Zacks Building Products - Wood industry, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Weyerhaeuser Company (WY - Free Report) reported mixed fourth-quarter 2019 results, with earnings missing the Zacks Consensus Estimate by 57.1%, while net sales beating the same by 1.6%. However, the top and bottom lines declined 5.4% and 70%, respectively, year over year. Its two major segments reported significantly lower net sales on a year-over-year basis.
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Louisiana-Pacific Corporation’s (LPX - Free Report) shares gained nearly 4% on Feb 11, despite reporting lower-than-expected results in fourth-quarter 2019. Better-than-expected SmartSide Strand revenue growth and its long-term adjusted EBITDA projection might have boosted investors’ sentiments. Also, the company’s announcement of a 7% increase in quarterly cash dividend to 14.5 cents per share and authorization of a new $200-million share repurchase program are expected to have added to the positives.
The company reported adjusted earnings of 5 cents per share, which lagged the Zacks Consensus Estimate of 10 cents by 50% and declined a whopping 73.4% from the year-ago period. The downside can be attributed to lower sales, and higher costs and expenses.
Net sales totaled $537 million, missing the consensus estimate of $552 million by 2.7% and declining from the year-ago figure of $589 million by 8.8%. Lower Oriented Strand Board (“OSB”) prices and reduced commodity OSB shipments across all North America segments (down 29%) negatively impacted its performance. However, these headwinds were partially offset by SmartSide Strand revenue growth of 11%.
Louisiana-Pacific Corporation Price, Consensus and EPS Surprise
Segmental Analysis
Siding: The segment’s sales of $230 million during the quarter were up 8% from the prior-year figure of $213 million. Adjusted EBITDA also increased 23.5% from the prior-year quarter to $42 million. The upside was backed by strong SmartSide Strand.
OSB: Sales in the segment declined 32.5% year over year to $172 million. The company’s adjusted EBITDA also deteriorated significantly to $6 million from $34 million reported a year ago. Increase in the Structural Solutions mix was more than offset by lower OSB pricing and shipments.
Engineered Wood Products or EWP: Segment’s sales grew 16.3% year over year to $93 million. The upside was backed by the temporary shutdown of its North Carolina facility in 2018 owing to damage caused by hurricane. Adjusted EBITDA also increased year over year to $3 million, primarily due to an increase in joint venture earnings and operational efficiency.
South America: Sales of $38 million decreased 2.6% year over year due to pricing pressure from increased competition in export markets in South America and Asia, partially offset by higher Chilean shipments. Adjusted EBITDA of $8 million was on par with the year-ago quarter.
Operating Highlights
Gross margin declined nearly 300 basis points (bps) year over year to 13%. Selling, general and administrative expenses — as a percentage of revenues — increased 110 bps.
Adjusted EBITDA from continuing operations was $49 million in the quarter, down 25% from the prior-year figure of $65 million. Adjusted EBITDA margin also contracted nearly 200 bps to 9.1%.
Financials
As of Dec 31, 2019, Louisiana-Pacific had cash and cash equivalents of $181 million compared with $878 million at the end of 2018. Long-term debt (excluding current portion) of $348 million slightly increased from the 2018-end level of $347 million.
At the end of 2019, net cash provided by operations was $159 million compared with $511 million in the comparable year-ago period.
2019 Highlights
In 2019, Louisiana-Pacific reported adjusted earnings of 37 cents per share, missing the consensus mark of 42 cents and declining 86.5% from the 2018 level of $2.75. Net sales of $2.31 billion also declined 18.3% year over year and slightly missed analysts’ expectation of $2.33 billion. Adjusted EBITDA also declined 68.3% from a year ago.
2020 View & Strategic Update
Based on current plans and expectations, Louisiana-Pacific expects capital expenditure in the range of $130-$140 million. SmartSide Strand revenue growth is targeted within 10-12% for 2020.
Notably, the company remains optimistic to fulfill its long-term adjusted EBITDA growth (through 2021) expectation of $165 million and expects EBITDA margins to be at least 20% in the Siding segment.
Zacks Rank & Peer Release
Louisiana-Pacific, which shares space with Norbord Inc. and Universal Forest Products Inc. (UFPI - Free Report) in the Zacks Building Products - Wood industry, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Weyerhaeuser Company (WY - Free Report) reported mixed fourth-quarter 2019 results, with earnings missing the Zacks Consensus Estimate by 57.1%, while net sales beating the same by 1.6%. However, the top and bottom lines declined 5.4% and 70%, respectively, year over year. Its two major segments reported significantly lower net sales on a year-over-year basis.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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