“LP’s financial results continue to be negatively affected by poor OSB pricing,” said Curt Stevens, CEO. “We have seen higher demand for most of our products but less than anticipated due to the anemic housing recovery.”
YEAR TO DATE RESULTS
For the nine months ended September 30, 2014, LP reported net sales of $1.5 billion compared to $1.6 billion in the first nine months of 2013. For the first nine months of 2014, LP reported loss from continuing operations of $30 million, or $0.22 per diluted share, compared to income of $197 million, or $1.36 per diluted share, for the same period in 2013. Adjusted EBITDA from continuing operations for the first nine months of 2014 was $61 million compared to $306 million for 2013. Reductions in OSB pricing accounted for $282 million decrease in both operating results and adjusted EBITDA from continuing operations.
ORIENTED STRAND BOARD (OSB) SEGMENT
LP’s OSB segment manufactures and distributes OSB structural panel products. The OSB segment reported net sales for the third quarter of 2014 of $233 million, a 5 percent decrease from $245 million of net sales in the third quarter of 2013. For the third quarter of 2014, the OSB segment reported an operating loss of $16 million compared to operating income of $30 million in the third quarter of 2013. For the third quarter, adjusted EBITDA from continuing operations for this segment decreased by $46 million compared to the third quarter of 2013. For the third quarter, sales volumes were higher by 13 percent and sales prices decreased by 16 percent compared to the same period in 2013. The decrease in sales price accounted for approximately $44 million of the decrease in both operating results and adjusted EBITDA from continuing operations.
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 $163 million in the third quarter of 2014, an increase of 10 percent from $149 million in the year-ago third quarter. For the third quarter of 2014, the Siding segment reported operating income of $21 million compared to $23 million in the year-ago quarter. For the third quarter, the Siding segment reported $26 million in adjusted EBITDA from continuing operations, a decrease of $1 million compared to the third quarter of 2013.
ENGINEERED WOOD PRODUCTS SEGMENT (EWP)
The EWP segment is comprised of LP SolidStart® I-Joist (IJ), Laminated Veneer Lumber and Laminated Strand Lumber (LVL and LSL). These products are principally used in new construction. EWP sales in the third quarter of 2014 totaled $82 million, an increase from $72 million reported in the third quarter of 2013. Operations were about breakeven for the third quarter of 2014 compared to a loss of $2.0 million in the third quarter of 2013. The EWP segment reported an improvement in adjusted EBITDA from continuing operations of $3 million as compared to the same quarter in 2013.
SOUTH AMERICA SEGMENT
The South American segment consists of OSB mills located in Chile and Brazil. South America sales in the third quarter of 2014 totaled $36 million, down from $42 million in the year-ago third quarter. For the third quarter of 2014, the South America segment reported a decrease in operating income of $5 million compared to the third quarter of 2013. South America segment reported $2 million in adjusted EBITDA from continuing operations in the third quarter a reduction from $8 million in 2013.
STOCK BUYBACK
On October 31, 2014, LP’s Board of Directors authorized LP to repurchase up to $100 million of the LP’s common stock. The purchases may be made from time to time as market conditions warrant and subject to regulatory considerations.
COMPANY OUTLOOK
“I expect housing to continue to increase but probably at a rate below the 20 % pace in the current consensus forecasts,” continued Stevens. “For LP, we will base our preliminary 2015 planning on 1.1 million housing starts,” he concluded.
LP is a premier supplier of building materials, delivering innovative, high-quality commodity and specialty products to its retail, wholesale, homebuilding and industrial customers.