Louisiana-Pacific Delivers Solid Beat; Swan Valley To Contribute Higher In Q2

Louisiana-Pacific Corporation (LP) (NYSE: LPX) reported results for the second quarter of 2015, which included the following:

Sales for the second quarter of $493 million were lower by 5 percent compared to the year ago quarter.
Net loss was $20 million ($0.14 per diluted share).
Non-GAAP adjusted loss was $12 million ($0.08 per diluted share).
Adjusted EBITDA for the second quarter was $16 million compared to $26 million in the second quarter of 2014.
Cash and cash equivalents were $481 million as of June 30, 2015.
“The continued weakness in OSB pricing in the quarter, we believe, was caused by the reduction in demand due to very wet weather in the middle of the country, including Texas,” Chief Executive Officer Curt Stevens said. “With the distribution channel relatively full coming out of the first quarter, re-ordering was at a slower pace than anticipated. I am pleased with another strong quarter from our Siding business and the return of EWP to positive adjusted EBITDA.”
For the second quarter of 2015, LP reported net loss of $20 million, or $0.14 per diluted share, as compared to an income of $2 million, or $0.01 per diluted share for the second quarter of 2014.
YEAR TO DATE RESULTS
For the six months ended June 30, 2015, LP reported net sales of $965 million compared to $963 million in the first six months of 2014. For the first six months of 2015, LP reported net loss of $54 million, or $0.38 per diluted share, compared to loss of $12 million, or $0.09 per diluted share, for the same period in 2014. Adjusted EBITDA for the first six months of 2015 was $22 million compared to $49 million for 2014. Reductions in OSB pricing accounted for $66.0 million decrease in both operating results and adjusted EBITDA.
ORIENTED STRAND BOARD (OSB) SEGMENT
LP’s OSB segment manufactures and distributes OSB structural panel products. The OSB segment reported net sales for the second quarter of 2015 of $211 million, a 6 percent decrease from $224 million of net sales in the second quarter of 2014. For the second quarter of 2015, the OSB segment reported an operating loss of $18 million compared to $6 million in the second quarter of 2014. For the second quarter of 2015, adjusted EBITDA for this segment decreased by $12 million compared to the second quarter of 2014. For the second quarter of 2015 as compared to second quarter of 2014, sales volumes increased 11 percent and sales prices decreased by 15 percent. The decrease in selling price unfavorably impacted operating results and adjusted EBITDA by approximately $38 million for the quarter as compared to the second quarter of 2014.
SIDING SEGMENT
LP’s Siding segment consists of SmartSide® siding as well as LP’s prefinished CanExel® siding line. These products are used in new construction as well as in the repair and remodeling markets. The Siding segment reported net sales of $164 million in the second quarter of 2015, a decrease of 3 percent from $170 million in the year-ago second quarter. For the second quarter of 2015, the Siding segment reported operating income of $29 million compared to $26 million in the year-ago quarter. For the second quarter of 2015, the Siding segment reported $35 million in adjusted EBITDA, an increase of $4 million compared to the second quarter of 2014.
ENGINEERED WOOD PRODUCTS SEGMENT (EWP)
The EWP segment is comprised of I-Joist (IJ), Laminated Veneer Lumber and Laminated Strand Lumber (LVL and LSL). EWP sales in the second quarter of 2015 totaled $72 million, down 5 percent from the year-ago quarter. Operating losses decreased to $2 million for the second quarter of 2015 from $5 million in the second quarter of 2014. For the second quarter, the EWP segment showed an increase of $2 million in adjusted EBITDA as compared to the same quarter in 2014.
SOUTH AMERICA SEGMENT
The South American segment consists of facilities in Chile and Brazil. The segment reported sales in the second quarter of 2015 of $39 million, down 8 percent from $42 million in the second quarter of 2014. Operating income was $2 million for the second quarter of 2015 compared to $4 million in the second quarter of 2014. For the second quarter, LP reported adjusted EBITDA in this segment of $4 million, a decrease of $2.5 million as compared to the second quarter of 2014.
COMPANY OUTLOOK
“With reported housing starts in June at 1.174 million and permits at 1.343 million, we should see an acceleration of building activity in the second half of this year,” Stevens continued. “Persistent labor shortages and the possibility of interest rate increases later in the year could dampen forecasted growth in the short term but increasing household formations and the need for housing should support continued building activity.”

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Neil Kwan, Post graduate in Finance, is editor and financial analyst and reports Basic Materials, Financial & REIT and Healthcare sectors. Prior joining Equities Mogul, Neil Kwan worked with Cleveland Research. If you have a great story idea for Neil Kwan, you can write at [editor@equitiesmogul.com ].

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