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Louisiana-Pacific (LPX) Down 4.9% 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 4.9% 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 drivers.
Louisiana-Pacific Corporation or LP, reported lackluster results for fourth-quarter 2022. Although earnings surpassed the Zacks Consensus Estimate, it declined significantly from the previous year. Net sales also declined year over year and missed analysts’ expectations.
LP chairman and CEO Brad Southern, stated, "Inflationary pressures continue to present headwinds, housing starts have softened, and OSB prices remain depressed after falling steeply in the fourth quarter. However, LP has managed through challenges like these before. I am bullish about the long-term fundamentals for housing, and very confident that LP's strategy of growth specialization will continue to deliver value in 2023."
Detailed Discussion
Louisiana-Pacific reported adjusted earnings of 61 cents per share, beating the Zacks Consensus Estimate of 58 cents by 5.2%. The bottom line declined a whopping 69% from the year-ago quarter’s reported figure of $1.97 per share.
Net sales of $705 million marginally missed the consensus estimate of $707 billion and declined 16% from the year-ago period due to lower OSB prices and volume.
Single-family housing starts fell to 193 from the 262 units reported in the year-ago period. Yet, multi-family starts rose to 136 units from the 120 units reported a year ago.
Segmental Analysis
Siding: The segment’s sales of $386 million were up 37% from the prior-year period, with an increase of 38% in Siding Solutions’ (formerly known as SmartSide) revenues to $385 million. This was backed by a 15% rise in the average net selling price and a 20% increase in volume from the prior-year level. The average net selling price benefited from list price increases and an improved mix of innovative products. Volume increased on the back of the ongoing ramp-up of the Houlton facility, steady customer demand and the non-recurrence of production downtime in the prior year for a major scheduled maintenance project.
Adjusted EBITDA increased a notable 83% to $88 million. Price and volume growth were offset by raw material, freight and labor inflation, and discretionary investments in capacity, and sales and marketing.
OSB: Sales in the segment decreased 45% year over year to $257 million, owing to 34% lower OSB prices. The company’s adjusted EBITDA fell 94% year over year to $13 million due to lower prices, increased raw material costs and wage inflation.
South America: Sales of $51 million declined 18% due to lower volumes and unfavorable foreign currency movements, partially offset by higher local OSB prices. Adjusted EBITDA fell 45% from the year-ago quarter to $12 million due to lower revenues and higher raw material costs.
Operating Highlights
The gross margin contracted to 18.2% from 36.6% reported a year ago. Adjusted EBITDA of $100 million was down from the prior-year quarter’s $278 million.
2022 Highlights
For the year, net sales amounted to $3.9 billion, down 2% from 2021. Siding Solutions’ net sales growth of 26% was offset by a 14% decline in OSB. Adjusted earnings per share were $11.77, down from the $13.97 reported in the previous year.
Adjusted EBITDA for the year summed up to $1.4 billion, down 30% from the 2021 number.
Financials
At 2022-end, LP had more than $900 million of liquidity. As of Dec 31, 2022, Louisiana-Pacific had cash and cash equivalents of $369 million compared with $358 million at the 2021-end. Long-term debt was in line with the 2021 level of $346 million.
For the fourth quarter and 2022, net cash provided by operations was $41 million and $1.14 billion, down from $201 million and $1.48 billion reported in the respective year-ago period. In 2022, it repurchased 14.4 million shares of its common shares. At Dec 31, 2022, $200 million was remaining of the total authorization.
Q1 Guidance
For first-quarter 2023, the company expects Siding Solutions’ revenues to decline 5% from the year-ago period's reported figure. OSB revenues are expected to be sequentially low by 20% (based on Random Lengths’ report published on Feb 17, 2023). It anticipates a consolidated adjusted EBITDA of $35 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -91.62% due to these changes.
VGM Scores
At this time, Louisiana-Pacific has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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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Louisiana-Pacific (LPX) Down 4.9% 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 4.9% 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 drivers.
Louisiana-Pacific Stock Dips Despite Q4 Earnings Beat
Louisiana-Pacific Corporation or LP, reported lackluster results for fourth-quarter 2022. Although earnings surpassed the Zacks Consensus Estimate, it declined significantly from the previous year. Net sales also declined year over year and missed analysts’ expectations.
LP chairman and CEO Brad Southern, stated, "Inflationary pressures continue to present headwinds, housing starts have softened, and OSB prices remain depressed after falling steeply in the fourth quarter. However, LP has managed through challenges like these before. I am bullish about the long-term fundamentals for housing, and very confident that LP's strategy of growth specialization will continue to deliver value in 2023."
Detailed Discussion
Louisiana-Pacific reported adjusted earnings of 61 cents per share, beating the Zacks Consensus Estimate of 58 cents by 5.2%. The bottom line declined a whopping 69% from the year-ago quarter’s reported figure of $1.97 per share.
Net sales of $705 million marginally missed the consensus estimate of $707 billion and declined 16% from the year-ago period due to lower OSB prices and volume.
Single-family housing starts fell to 193 from the 262 units reported in the year-ago period. Yet, multi-family starts rose to 136 units from the 120 units reported a year ago.
Segmental Analysis
Siding: The segment’s sales of $386 million were up 37% from the prior-year period, with an increase of 38% in Siding Solutions’ (formerly known as SmartSide) revenues to $385 million. This was backed by a 15% rise in the average net selling price and a 20% increase in volume from the prior-year level. The average net selling price benefited from list price increases and an improved mix of innovative products. Volume increased on the back of the ongoing ramp-up of the Houlton facility, steady customer demand and the non-recurrence of production downtime in the prior year for a major scheduled maintenance project.
Adjusted EBITDA increased a notable 83% to $88 million. Price and volume growth were offset by raw material, freight and labor inflation, and discretionary investments in capacity, and sales and marketing.
OSB: Sales in the segment decreased 45% year over year to $257 million, owing to 34% lower OSB prices. The company’s adjusted EBITDA fell 94% year over year to $13 million due to lower prices, increased raw material costs and wage inflation.
South America: Sales of $51 million declined 18% due to lower volumes and unfavorable foreign currency movements, partially offset by higher local OSB prices. Adjusted EBITDA fell 45% from the year-ago quarter to $12 million due to lower revenues and higher raw material costs.
Operating Highlights
The gross margin contracted to 18.2% from 36.6% reported a year ago. Adjusted EBITDA of $100 million was down from the prior-year quarter’s $278 million.
2022 Highlights
For the year, net sales amounted to $3.9 billion, down 2% from 2021. Siding Solutions’ net sales growth of 26% was offset by a 14% decline in OSB. Adjusted earnings per share were $11.77, down from the $13.97 reported in the previous year.
Adjusted EBITDA for the year summed up to $1.4 billion, down 30% from the 2021 number.
Financials
At 2022-end, LP had more than $900 million of liquidity. As of Dec 31, 2022, Louisiana-Pacific had cash and cash equivalents of $369 million compared with $358 million at the 2021-end. Long-term debt was in line with the 2021 level of $346 million.
For the fourth quarter and 2022, net cash provided by operations was $41 million and $1.14 billion, down from $201 million and $1.48 billion reported in the respective year-ago period. In 2022, it repurchased 14.4 million shares of its common shares. At Dec 31, 2022, $200 million was remaining of the total authorization.
Q1 Guidance
For first-quarter 2023, the company expects Siding Solutions’ revenues to decline 5% from the year-ago period's reported figure. OSB revenues are expected to be sequentially low by 20% (based on Random Lengths’ report published on Feb 17, 2023). It anticipates a consolidated adjusted EBITDA of $35 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -91.62% due to these changes.
VGM Scores
At this time, Louisiana-Pacific has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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.