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Louisiana-Pacific (LPX) Q1 Earnings & Sales Top Estimates

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Louisiana-Pacific Corporation’s (LPX - Free Report) — commonly known as LP — shares moved up 8.92% on May 3 after the company reported robust results for first-quarter 2022. The top and the bottom line surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis.

LP chairman and CEO Brad Southern, stated, "Siding Solutions sales grew at 17% to set a quarterly record while achieving a 25% EBITDA margin despite inflationary headwinds and simultaneous capacity expansion projects. LP SmartSide siding production began on time at our Houlton, Maine facility. Higher prices for OSB and EWP helped LP achieve its second-highest quarter for adjusted EBITDA, and our ongoing share repurchases resulted in a record quarterly adjusted earnings per share."

Detailed Discussion

Louisiana-Pacific’s adjusted earnings came in at $5.08 per share, surpassing the Zacks Consensus Estimate of $4.54 by 11.9%. The bottom line increased 68.8% from the year-ago reported figure of $3.01 per share.

LouisianaPacific Corporation Price, Consensus and EPS Surprise

 

LouisianaPacific Corporation Price, Consensus and EPS Surprise

LouisianaPacific Corporation price-consensus-eps-surprise-chart | LouisianaPacific Corporation Quote

 

Net sales of $1.34 billion topped the consensus estimate of $1.21 billion by almost 11% and improved 31% from the year-ago period. The upside was driven by solid segmental results.

Single-family housing starts increased 3.5% year over year and multi-family starts rose 22.6%.

Segmental Analysis

Siding: The segment’s sales of $332 million were up 16.5% from the prior-year period. A 17% increase in Siding Solutions (formerly known as SmartSide) revenues, backed by a 12% rise in average net selling price and a volume increase of 4% from the prior-year quarter’s levels, led to the upside. Higher sales of innovative products drove the results. Adjusted EBITDA fell 7.8% from the prior-year quarter to $83 million due to raw material and freight cost inflation and higher investments in capacity expansions, equipment maintenance, and sales and marketing.

OSB: Sales in the segment increased 38% year over year to $744 million, backed by 12% increased volume and 23% higher OSB prices. The company’s adjusted EBITDA ralllied 42.7% year over year to $505 million, driven by higher prices and sales volumes (primarily Structural Solutions) along with increased raw material costs.

EWP: Segment’s sales rose 38% year over year to $170 million, backed by price increases in response to significantly higher input costs, partially offset by the discontinuation of LSL production. Adjusted EBITDA increased significantly to $38 million from just $7 million a year ago. Increased pricing in response to the rising input costs contributed to the top and the bottom line.

South America: Sales of $63 million rose 26.4% and adjusted EBITDA grew 19% from the year-ago quarter to $25 million due to higher OSB and siding pricing.

Operating Highlights

The gross margin contracted 350 basis points year over year to 49.4%. Adjusted EBITDA of $636 million was up 37.7% from the prior year’s figure of $461 million.

Financials

As of Mar 31, 2022, Louisiana-Pacific had cash and cash equivalents of $624 million compared with $358 million at the 2021-end. Long-term debt was in line with the 2021-level of $346 million.

For the first quarter, net cash provided by operations was $425 million, down from $314 million reported in the year-ago period.

Guidance

For second-quarter 2022, the company expects Siding Solutions revenue growth to be more than 20% from the year-ago period. OSB revenues are expected to be sequentially low by 7% (based on Random Lengths’ report published on Apr 29, 2022). It anticipates consolidated adjusted EBITDA of more than $540 million.

For 2022, Louisiana-Pacific now 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 2020.

Zacks Rank

Louisiana-Pacific currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some Recent Construction Releases

KBR, Inc. (KBR - Free Report) reported mixed results in first-quarter 2022, with earnings topping the Zacks Consensus Estimate and revenues missing the same.

On a year-over-year basis, the metrics increased strongly. The company benefited from solid Government Solutions growth and strong execution across the business.

EMCOR Group, Inc. (EME - Free Report) reported mixed first-quarter 2022 results. The bottom line lagged the Zacks Consensus Estimate and declined on a year-over-year basis. Volatile operating environment, particularly in the U.S. Construction and U.S. Building Services segments hampered earnings due to labor disruption stemming from the Omicron variant, supply chain issues and rising energy costs.

On the contrary, revenues surpassed the Consensus Estimate and moved up from the year-ago quarter’s levels, driven by double-digit growth in the U.S. Electrical Construction, U.S. Building Services and U.S. Industrial Services segments.

PulteGroup Inc. (PHM - Free Report) reported solid results for first-quarter 2022. Both earnings and revenues topped the Zacks Consensus Estimate and improved year over year on the back of a solid housing market backdrop.

An improving economy, a favorable job market and rising wages helped PHM mitigate the impacts of higher home prices and rising mortgage rates.


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