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Louisiana-Pacific (LPX) Down 0.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have lost about 0.8% in that time frame, outperforming 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 Q3 Earnings Top, Margin Rises
Louisiana-Pacific Corporation — commonly known as LP — reported third-quarter 2021 results. Both the top and bottom lines surpassed the Zacks Consensus Estimate and grew impressively on a year-over-year basis.
LP chairman and CEO, Brad Southern, said "As expected, the third quarter saw a significant correction in OSB prices and ongoing headwinds from raw material prices and availability. Despite these challenges, LP earned $522 million in EBITDA and $3.87 per share as Siding sales grew by 19%, EWP and South America delivered record quarters, and OSB continued to generate exceptional cash flow."
Detailed Discussion
Louisiana-Pacific’s third-quarter adjusted earnings came in at $3.87 per share, surpassing the Zacks Consensus Estimate of $3.34 by 15.9%. The bottom line also increased 148.1% from the year-ago reported figure of $1.56 per share.
Net sales of $1.22 billion topped the consensus estimate of $1.03 million by 18.5% and improved 53.3% from the year-ago period. The upside was driven by solid segmental results. Single-family housing starts increased 3.5% year over year. Multi-family starts improved 21.2% from the prior year.
Segmental Analysis
Siding: The segment’s sales of $312 million were up 16% from the prior-year period. The upside was due to increased sales volume, price and product mix. Also, a 19% increase in Siding Solutions (formerly known as SmartSide) revenues supported the growth. Adjusted EBITDA fell 4% from the prior-year quarter to $73 million due to increased costs for raw materials, freight, maintenance, and higher investments in sales and marketing.
OSB: Sales in the segment increased 63% year over year to $600 million. The company’s adjusted EBITDA also jumped 102% from a year ago to $381 million. Substantially higher OSB prices and higher volumes aided the segment.
EWP: Segment’s sales grew 95% year over year to $201 million. Adjusted EBITDA increased a whopping 367% year over year to $42 million. Increased pricing in response to rising input costs led to the top-line growth.
South America: Sales of $76 million rose 69% and adjusted EBITDA grew 236% from the year-ago quarter to $37 million due to higher OSB and siding pricing, partially offset by increased imported raw material costs.
Operating Highlights
Gross margin expanded 830 basis points (bps) year over year to 45%. Adjusted EBITDA of $522 million was up 91.2% from the prior-year figure of $273 million. The upside was primarily due to growth in Siding Solutions and higher OSB prices, partially offset by intense inflation.
Financials
As of Sep 30, 2021, Louisiana-Pacific had cash and cash equivalents of $607 million compared with $535 million at 2020-end. Long-term debt was $346 million, down from $348 million at 2020-end.
For the third quarter, net cash provided by operations was $511 million, up from $218 million reported in the year-ago period.
Q4 Guidance
For fourth-quarter 2021, the company expects Siding Solutions revenue growth to be 5% from the year-ago period. OSB revenues are expected to sequentially fall 30% owing to average OSB price. It anticipates consolidated adjusted EDITDA of more than $200 million.
Given the current scenario, Louisiana-Pacific now expects capital expenditures for 2021 to be $250 million ($270 million expected earlier). Meanwhile, the company reiterated its second-half 2021 guidance for Siding Solutions revenue growth of 10% and EBITDA margin of 25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 7.5% due to these changes.
VGM Scores
At this time, Louisiana-Pacific has a strong 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 quintile 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, Louisiana-Pacific has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Louisiana-Pacific (LPX) Down 0.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have lost about 0.8% in that time frame, outperforming 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 Q3 Earnings Top, Margin Rises
Louisiana-Pacific Corporation — commonly known as LP — reported third-quarter 2021 results. Both the top and bottom lines surpassed the Zacks Consensus Estimate and grew impressively on a year-over-year basis.
LP chairman and CEO, Brad Southern, said "As expected, the third quarter saw a significant correction in OSB prices and ongoing headwinds from raw material prices and availability. Despite these challenges, LP earned $522 million in EBITDA and $3.87 per share as Siding sales grew by 19%, EWP and South America delivered record quarters, and OSB continued to generate exceptional cash flow."
Detailed Discussion
Louisiana-Pacific’s third-quarter adjusted earnings came in at $3.87 per share, surpassing the Zacks Consensus Estimate of $3.34 by 15.9%. The bottom line also increased 148.1% from the year-ago reported figure of $1.56 per share.
Net sales of $1.22 billion topped the consensus estimate of $1.03 million by 18.5% and improved 53.3% from the year-ago period. The upside was driven by solid segmental results.
Single-family housing starts increased 3.5% year over year. Multi-family starts improved 21.2% from the prior year.
Segmental Analysis
Siding: The segment’s sales of $312 million were up 16% from the prior-year period. The upside was due to increased sales volume, price and product mix. Also, a 19% increase in Siding Solutions (formerly known as SmartSide) revenues supported the growth. Adjusted EBITDA fell 4% from the prior-year quarter to $73 million due to increased costs for raw materials, freight, maintenance, and higher investments in sales and marketing.
OSB: Sales in the segment increased 63% year over year to $600 million. The company’s adjusted EBITDA also jumped 102% from a year ago to $381 million. Substantially higher OSB prices and higher volumes aided the segment.
EWP: Segment’s sales grew 95% year over year to $201 million. Adjusted EBITDA increased a whopping 367% year over year to $42 million. Increased pricing in response to rising input costs led to the top-line growth.
South America: Sales of $76 million rose 69% and adjusted EBITDA grew 236% from the year-ago quarter to $37 million due to higher OSB and siding pricing, partially offset by increased imported raw material costs.
Operating Highlights
Gross margin expanded 830 basis points (bps) year over year to 45%. Adjusted EBITDA of $522 million was up 91.2% from the prior-year figure of $273 million. The upside was primarily due to growth in Siding Solutions and higher OSB prices, partially offset by intense inflation.
Financials
As of Sep 30, 2021, Louisiana-Pacific had cash and cash equivalents of $607 million compared with $535 million at 2020-end. Long-term debt was $346 million, down from $348 million at 2020-end.
For the third quarter, net cash provided by operations was $511 million, up from $218 million reported in the year-ago period.
Q4 Guidance
For fourth-quarter 2021, the company expects Siding Solutions revenue growth to be 5% from the year-ago period. OSB revenues are expected to sequentially fall 30% owing to average OSB price. It anticipates consolidated adjusted EDITDA of more than $200 million.
Given the current scenario, Louisiana-Pacific now expects capital expenditures for 2021 to be $250 million ($270 million expected earlier). Meanwhile, the company reiterated its second-half 2021 guidance for Siding Solutions revenue growth of 10% and EBITDA margin of 25%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 7.5% due to these changes.
VGM Scores
At this time, Louisiana-Pacific has a strong 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 quintile 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, Louisiana-Pacific has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.