A month has gone by since the last earnings report for Louisiana-Pacific (
LPX Quick Quote LPX - Free Report) . Shares have lost about 5.5% 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 catalysts.
Louisiana-Pacific’s Q2 Earnings & Sales Miss
Louisiana-Pacific Corporation or LP, reported unimpressive results for second-quarter 2023. Earnings and net sales missed the Zacks Consensus Estimate and declined year over year.
LP's strategy positions it well for long-term growth as the housing outlook continues to improve. Detailed Discussion
Louisiana-Pacific reported adjusted earnings of 55 cents per share, lagging the Zacks Consensus Estimate of 64 cents by 14.1%. The bottom line declined immensely from the year-ago quarter’s reported figure of $4.19 per share.
Net sales of $611 million also missed the consensus estimate of $668 million by 8.6% and declined 46% from the prior year’s $1,130 million, due to tepidness across the segments. Single-family housing starts fell to 261 from the 303 units reported in the year-ago period. Multi-family starts were down to 138 units from 147 units reported a year ago. Adjusted EBITDA of $93 million was down from the prior-year quarter’s level of $491 million. Segmental Analysis Siding: The segment’s sales of $320 million were down 10% from the prior-year period, with a decline of 11% in Siding Solutions’ (formerly known as SmartSide) revenues to $318 million. A 6% rise in the average net selling price (ASP) was offset by a 16% decrease in volume from prior-year levels. The average net selling price benefited from list price increases. Volume reduced on challenging new and existing home selling markets and elevated levels of channel inventory compared with the prior periods. Adjusted EBITDA came in at $59 million, a 24% decline from $78 million reported a year ago. Reduced net sales, raw material inflation and discretionary investments in capacity and sales & marketing impacted adjusted EBITDA. OSB: Sales in the segment decreased 66% year over year to $229 million, owing to lower OSB prices, a decrease in sales volume from production curtailments and a decline related to production volume from the conversion of its Sagola, MI, mill to siding production. The company’s adjusted EBITDA fell 91% year over year to $37 million due to lower prices and sales volumes, partially offset by lower mill-related costs. South America: Sales of $53 million declined 25% due to lower OSB volumes and ASP. Adjusted EBITDA fell 52% from the year-ago quarter to $13 million due to lower revenues and higher raw material costs. Financials
As of Jun 30, 2023, Louisiana-Pacific had cash and cash equivalents of $71 million compared with $369 million at 2022-end. Long-term debt was $377 million compared with the 2022-end level of $346 million.
For the second quarter, net cash provided by operations was $88 million, down from $483 million reported in the respective year-ago period. At June-end, $200 million remained of the total authorization. Guidance
For 2023, the company expects Siding Solutions’ revenues to decline by 10% from the year-ago period.
For third-quarter, OSB revenues are expected to be sequentially higher by at least 50% (based on Random Lengths’ report published on Jul 28, 2023). It anticipates a consolidated adjusted EBITDA of $160-$180 million. For the year, the company anticipates capital expenditures to range between $290 million and $310 million. The capital expenditure for mill conversions is likely to be $120-$130 million, $120-$125 million for sustaining maintenance and $50-$55 million for other strategic growth projects. How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 53.36% due to these changes.
At this time, Louisiana-Pacific has a subpar Growth Score of D, however its Momentum Score is doing a bit better 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions 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.