LP Reports Third Quarter 2009 Results
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NASHVILLE, Tenn.--(BUSINESS WIRE)-- Louisiana-Pacific Corporation (LP) (NYSE: LPX) reported today results for the third quarter of 2009, which included the following:
-- Total sales for the third quarter of $309 million were down 21 percent
versus a year ago, primarily the result of dramatically reduced U.S.
housing starts, which dropped 31 percent from third quarter 2008 levels,
as weakness in home building continued.
-- Loss from continuing operations was $12.7 million, or $0.12 per diluted
share, for the third quarter of 2009, an improvement of 87 percent over
the results in the third quarter of 2008.
-- Adjusted EBITDA from continuing operations for the third quarter was
$11.0 million compared to a loss of $27.5 million in the third quarter
of 2008.
"We are reporting positive EBITDA for the third quarter of 2009," LP Chief Executive Officer Rick Frost said. "While the housing market continues to be very depressed, there were seasonal improvements in demand and a few encouraging signs that the housing market is beginning to recover. However, much of the credit is due to the focus on cost containment, managing our operations more efficiently and lower raw materials costs."
THIRD QUARTER RESULTS
For the quarter ended September 30, 2009, LP reported net sales of $309 million, down from $390 million in the third quarter of 2008. For the third quarter, the company reported an operating loss of $8.1 million as compared to a loss in the third quarter of 2008 of $67.6 million.
For the third quarter of 2009, LP reported a loss from continuing operations of $12.7 million, or $0.12 per diluted share, as compared to a loss from continuing operations of $100.4 million, or $0.98 per diluted share, for the third quarter of 2008.
YEAR-TO-DATE RESULTS
For the nine months ended September 30, 2009, LP reported net sales of $780 million, down from $1.126 billion in the first nine months of 2008. For the first nine months of 2009, the company reported an operating loss of $82.8 million as compared to a loss in the comparable period of 2008 of $277.4 million. Adjusted EBITDA from continuing operations for the first nine months of 2009 was a $25.0 million loss compared to a $118.5 million loss in the first nine months of 2008.
For the first nine months of 2009, LP reported a loss from continuing operations of $70.2 million, or $0.67 per diluted share, as compared to $225.7 million, or $2.19 per diluted share, for the first nine months of 2008.
ORIENTED STRAND BOARD (OSB) SEGMENT
LP's OSB segment manufactures and distributes OSB structural panel products. LP is currently operating eight facilities and has indefinitely curtailed four mills due to market conditions. The OSB segment reported net sales for the third quarter of 2009 of $123 million, down 33 percent compared with $183 million of net sales in the third quarter of 2008. For the third quarter of 2009, the OSB segment reported an operating loss of $6.0 million, an improvement of 78 percent compared with an operating loss of $27.7 million in the third quarter of 2008. For the third quarter, LP realized an improvement of $18.4 million in adjusted EBITDA from continuing operations for this segment as compared to the third quarter of 2008. For the third quarter of 2009 as compared to the third quarter of 2008, sales volumes were down 26 percent with sales price decreasing by 6 percent. Decrease in sales price accounted for a decline of $7.6 million in both operating results and adjusted EBITDA from continuing operations.
Operating results reflected the favorable effects of continued actions to reduce manufacturing costs by taking advantage of lower cost petroleum-based raw materials, more efficient operating schedules and selective curtailments. LP also benefited from the weakening of the Canadian dollar compared to the third quarter of 2008.
SIDING SEGMENT
LP's Siding segment consists of LP SmartSide(R) Trim & Siding as well as LP Canexel(R) Prefinished Siding line. These products are used in new construction as well as in repair and remodeling markets. The Siding segment reported net sales of $111 million in the third quarter of 2009, down 5 percent from $117 million in the year-ago third quarter. For the third quarter of 2009, the Siding segment reported an operating income of $16.1 million compared to $4.6 million in the year-ago quarter. For the third quarter, Siding reported $21.3 million in adjusted EBITDA from continuing operations, an improvement of $11.3 million as compared to the third quarter of 2008.
In the third quarter of 2009, while sales were off across many regions, the Siding segment increased market penetration and experienced continued strength in repair and remodel markets. Like OSB, the segment continued to realize reductions in the cost of petroleum-based raw materials used in production as well as efficiencies in other manufacturing costs.
ENGINEERED WOOD PRODUCTS SEGMENT (EWP)
The EWP segment is comprised of I-Joist (IJ), Laminated Veneer Lumber and Laminated Strand Lumber (LVL and LSL). As these products are used principally in new construction, this segment saw reductions in sales comparable to the significant decline in housing starts. EWP segment sales in the third quarter of 2009 totaled $48 million, down 25 percent from $63 million in the year-ago quarter. Operating losses decreased 43 percent to $6.3 million for the third quarter of 2009 from $11 million for the third quarter of 2008. For the third quarter, EWP reported a loss of $3 million in adjusted EBITDA from continuing operations, an improvement of $3.5 million as compared to the third quarter of 2008.
The lower sales in the third quarter were driven by lower volumes and softening prices. The margin improvement was due to reduced manufacturing and support costs.
COMPANY OUTLOOK
During the third quarter, LP successfully completed an equity offering of 20.7 million shares that provided net cash after expenses of $132.3 million. After the end of the quarter, LP used $112.6 million of this cash to retire $131.3 million face amount of its 2017 notes under the equity claw back provisions stipulated in the note agreement. This series of transactions not only reduced LP's debt and increased cash but also eliminated cash interest payments of approximately $17 million per year.
"2009 continues to be challenging for all of our businesses. During the third quarter, we did see improvement in our operations, particularly Siding. Looking forward, we believe that some recent improvements in housing statistics may bode well for the 2010 building season. Because the fourth quarter is historically a weak part of the year for demand, our goal for the remainder of the year is to conserve cash and improve liquidity so that when this economic downturn subsides, we will be well positioned to compete," Frost concluded.
About LP
LP is a leading manufacturer of quality engineered wood building materials including OSB, structural framing products, and exterior siding for use in residential, industrial and light commercial construction. From manufacturing facilities in the U.S., Canada, Chile and Brazil, LP products are sold to builders and homeowners through building materials distributors and dealers and retail home centers. Founded in 1973, LP is headquartered in Nashville, Tennessee and traded on the New York Stock Exchange under LPX. For more information, visit www.lpcorp.com.
FORWARD LOOKING STATEMENTS
This news release contains statements concerning Louisiana-Pacific Corporation's (LP) future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters addressed in these statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, including the level of interest rates and housing starts, market demand for the company's products, and prices for structural products; the availability, cost and other terms of capital; the efficiency and consequences of operations improvement initiatives and cash conservation measures; the effect of forestry, land use, environmental and other governmental regulations; the ability to obtain regulatory approvals; and the risk of losses from fires, floods and other natural disasters. These and other factors that could cause or contribute to actual results differing materially from those contemplated by such forward-looking statements are discussed in greater detail in the company's Securities and Exchange Commission filings.
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
FINANCIAL AND QUARTERLY DATA
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net sales $ 308.8 $ 389.6 $ 779.6 $ 1,126.0
Loss from operations $ (8.1 ) $ (67.6 ) $ (82.8 ) $ (277.4 )
Loss before income
taxes and equity in $ (20.4 ) $ (158.3 ) $ (107.1 ) $ (366.8 )
loss of unconsolidated
affiliates
Loss from continuing
operations excluding
(gain) loss on sale or
impairment of
long-lived assets,
other operating credits $ (14.2 ) $ (39.0 ) $ (75.1 ) $ (122.5 )
and charges, net, gain
(loss) on early debt
extinguishment and
other than temporary
investment impairment
Loss from continuing $ (12.7 ) $ (100.4 ) $ (70.2 ) $ (225.7 )
operations
Net loss attributable $ (12.5 ) $ (111.1 ) $ (72.3 ) $ (238.3 )
to LP
Net loss per share - $ (0.12 ) $ (1.08 ) $ (0.70 ) $ (2.32 )
basic and diluted
Average shares
outstanding (in
millions)
Basic and diluted 103.4 102.9 103.2 102.9
Calculation of loss from continuing operations excluding (gain) loss on sale or impairment of long-lived assets and other operating credits and charges, net, gain on early debt extinguishment and other than temporary investment impairment:
Loss from
continuing $ (12.7 ) $ (100.4 ) $ (70.2 ) $ (225.7 )
operations
Other than
temporary 0.1 88.7 1.8 91.2
investment
impairment
(Gain) loss on
early 0.2 - (0.4 ) -
extinguishment
of debt
(Gain) loss on sale or
impairment of long-lived (1.2 ) 9.8 (2.1 ) 9.5
assets
Other operating
credits and (1.6 ) 1.6 (7.3 ) 67.7
charges, net
(2.5 ) 100.1 (8.0 ) 168.4
Provision (benefit) for
income taxes on above 1.0 (38.7 ) 3.1 (65.2 )
items
(1.5 ) 61.4 (4.9 ) 103.2
$ (14.2 ) $ (39.0 ) $ (75.1 ) $ (122.5 )
Per share -
basic and $ (0.14 ) $ (0.38 ) $ (0.73 ) $ (1.19 )
diluted
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Net sales $ 308.8 $ 389.6 $ 779.6 $ 1,126.0
Operating costs
and expenses:
Cost of sales 271.4 382.2 729.1 1,130.0
Depreciation,
amortization and 22.2 27.0 60.2 80.4
cost of timber
harvested
Selling and 26.1 36.6 82.5 115.8
administrative
(Gain) loss on
sale or impairment (1.2 ) 9.8 (2.1 ) 9.5
of long-lived
assets
Other operating
credits and (1.6 ) 1.6 (7.3 ) 67.7
charges, net
Total operating 316.9 457.2 862.4 1,403.4
costs and expenses
Loss from (8.1 ) (67.6 ) (82.8 ) (277.4 )
operations
Non-operating
income (expense):
Foreign currency
exchange gain 1.0 2.3 10.3 6.6
(loss)
Gain (loss) on
early debt (0.2 ) - 0.4 -
extinguishment
Other than
temporary (0.1 ) (88.7 ) (1.8 ) (91.2 )
investment
impairment
Interest expense,
net of capitalized (20.4 ) (12.4 ) (53.3 ) (36.3 )
interest
Investment income 7.4 8.1 20.1 31.5
Total
non-operating (12.3 ) (90.7 ) (24.3 ) (89.4 )
income (expense)
Loss before taxes
and equity in loss (20.4 ) (158.3 ) (107.1 ) (366.8 )
of unconsolidated
affiliates
Benefit for income (10.5 ) (61.0 ) (45.7 ) (153.7 )
taxes
Equity in loss of
unconsolidated 2.8 3.1 8.8 12.6
affiliates
Loss from
continuing (12.7 ) (100.4 ) (70.2 ) (225.7 )
operations
Discontinued
operations:
Loss from
discontinued (0.4 ) (17.4 ) (4.8 ) (20.5 )
operations before
income taxes
Income tax benefit (0.2 ) (6.7 ) (1.9 ) (7.9 )
Loss from
discontinued (0.2 ) (10.7 ) (2.9 ) (12.6 )
operations
Net loss (12.9 ) (111.1 ) (73.1 ) (238.3 )
Less: Net loss
attributed to (0.4 ) - (0.8 ) -
noncontrolling
interest
Net loss
attributed to $ (12.5 ) $ (111.1 ) $ (72.3 ) $ (238.3 )
Louisiana-Pacific
Corporation
Loss per share of
common stock
(basic and
diluted):
Loss from
continuing $ (0.12 ) $ (0.98 ) $ (0.67 ) $ (2.19 )
operations
Loss from
discontinued - (0.10 ) (0.03 ) (0.13 )
operations
Net loss per share $ (0.12 ) $ (1.08 ) $ (0.70 ) $ (2.32 )
Average shares of
stock outstanding 103.4 102.9 103.2 102.9
- basic and
diluted
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
September 30, 2009 December 31, 2008
ASSETS
Cash and cash equivalents $ 439.8 $ 97.7
Short-term investments 6.0 21.4
Receivables, net 79.6 43.8
Income tax receivable 12.2 94.2
Inventories 151.7 187.3
Prepaid expenses and other current assets 7.7 9.9
Deferred income taxes 25.3 25.3
Current portion of notes receivable from 135.1 20.0
asset sales
Current assets of discontinued operations 3.0 3.1
Total current assets 860.4 502.7
Timber and timberlands 50.4 55.6
Property, plant and equipment 2,325.8 2,324.6
Accumulated depreciation (1,285.9 ) (1,250.3 )
Net property, plant and equipment 1,039.9 1,074.3
Notes receivable from asset sales 123.5 238.6
Long-term investments 42.3 19.3
Restricted cash 39.4 76.7
Investments in and advances to affiliates 178.2 186.9
Deferred debt costs 16.7 3.3
Other assets 27.1 26.3
Long-term assets of discontinued 5.0 5.0
operations
Total assets $ 2,382.9 $ 2,188.7
LIABILITIES AND EQUITY
Current portion of long-term debt $ 162.6 $ 7.7
Current portion of limited recourse notes 133.4 20.0
payable
Short-term notes payable 0.2 2.0
Accounts payable and accrued liabilities 116.9 121.5
Current portion of deferred tax 3.0 4.7
liabilities
Current portion of contingency reserves 10.0 10.0
Total current liabilities 426.1 165.9
Long-term debt, excluding current
portion:
Limited recourse notes payable 119.9 233.3
Other long-term debt 209.6 239.3
Total long-term debt, 329.5 472.6
excluding current portion
Contingency reserves, excluding current 23.4 30.5
portion
Other long-term liabilities 126.9 130.8
Deferred income taxes 150.7 187.9
Redeemable noncontrolling interest 20.9 18.7
Stockholders' equity:
Common stock 138.7 116.9
Additional paid-in capital 562.9 441.3
Retained earnings 947.2 1,019.5
Treasury stock (286.1 ) (297.3 )
Accumulated comprehensive loss (57.3 ) (98.1 )
Total stockholders' equity 1,305.4 1,182.3
Total liabilities and equity $ 2,382.9 $ 2,188.7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
Quarter Ended September 30, Nine Months Ended Sept. 30,
2009 2008 2009 2008
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (12.9 ) $ (111.1 ) $ (73.1 ) $ (238.3 )
Adjustments to
reconcile net loss to
net cash provided by
(used in) operating
activities:
Depreciation,
amortization and cost 22.2 27.0 60.2 80.4
of timber harvested
Loss of unconsolidated 2.8 3.1 8.8 12.6
affiliates
Other operating
charges and credits, 1.1 (43.9 ) 3.9 28.3
net
(Gain) loss on sale or
impairment of (1.1 ) 9.8 (2.1 ) 9.5
long-lived assets
Other than temporary 0.1 88.7 1.8 91.2
investment impairment
Stock based
compensation expense 1.5 2.5 5.5 7.4
related to stock plans
Exchange (gain) loss 2.3 (7.5 ) (4.7 ) (16.6 )
on remeasurement
Cash settlement of (1.7 ) (5.6 ) (10.7 ) (15.2 )
contingencies
Warranty reserves, net (0.9 ) 14.0 (0.9 ) 14.4
of payment
Other adjustments (3.0 ) 2.0 (0.2 ) 3.2
Pension expense (in 2.9 2.0 6.7 8.2
excess of payments)
Decrease (increase) in (1.8 ) 4.0 (33.1 ) (7.3 )
receivables
Decrease in income tax 1.2 61.0 75.8 48.8
receivables
Decrease (increase) in 4.5 (1.1 ) 43.0 9.9
inventories
Decrease (increase) in (2.1 ) (3.1 ) 2.5 (4.7 )
prepaid expenses
Increase (decrease) in
accounts payable and (11.1 ) (20.3 ) 0.6 (27.0 )
accrued liabilities
Decrease in deferred (13.8 ) (57.0 ) (50.8 ) (95.4 )
income taxes
Net cash provided by
(used in) operating (9.8 ) (35.5 ) 33.2 (90.6 )
activities
CASH FLOWS FROM
INVESTING ACTIVITIES:
Property, plant, and (2.0 ) (12.4 ) (6.7 ) (88.3 )
equipment additions
Purchase of a business - (0.8 ) - (45.4 )
Investments in and
advances to joint 2.7 1.5 1.3 (2.7 )
ventures
Proceeds from sale of 2.0 - 7.2 -
assets
Receipt of proceeds - - - 54.4
from notes receivable
Cash paid for purchase - (43.1 ) - (216.0 )
of investments
Proceeds from sales of 1.4 77.9 22.9 287.2
investments
(Increase) decrease in
restricted cash under (0.4 ) - 37.2 (12.0 )
letters of credit
Other investing 0.2 - 0.1 1.1
activities, net
Net cash provided by
(used in) investing 3.9 23.1 62.0 (21.7 )
activities
CASH FLOWS FROM
FINANCING ACTIVITIES:
Borrowing of long term - - 281.3 12.0
debt
Repayment of long term (13.3 ) - (149.6 ) (53.6 )
debt
Payment of debt - - (15.5 ) -
issuance fees
Net borrowings under
revolving credit lines 0.2 (4.3 ) 0.2 (16.1 )
and short term notes
payable
Sales of common stock 132.3 - 132.3 -
Payment of cash - - - (31.0 )
dividends
Net cash provided by
(used in) financing 119.2 (4.3 ) 248.7 (88.7 )
activities
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
AND
CASH EQUIVALENTS 1.8 2.0 (1.8 ) 3.6
Net increase
(decrease) in cash and 115.1 (14.7 ) 342.1 (197.4 )
cash equivalents
Cash and cash
equivalents at 324.7 169.4 97.7 352.1
beginning of period
Cash and cash
equivalents at end of $ 439.8 $ 154.7 $ 439.8 $ 154.7
period
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(Dollar amounts in millions) (Unaudited)
Dollar amounts Quarter Ended September 30, Nine Months Ended September
in millions 30,
2009 2008 2009 2008
Net sales:
OSB $ 122.5 $ 183.3 $ 292.5 $ 512.5
Siding 111.3 117.0 287.7 347.7
Engineered 47.8 63.4 113.6 189.2
Wood Products
Other 27.2 25.9 85.9 76.6
$ 308.8 $ 389.6 $ 779.7 $ 1,126.0
Operating
profit (loss):
OSB $ (6.0 ) $ (27.7 ) $ (48.6 ) $ (124.3 )
Siding 16.1 4.6 24.8 13.8
Engineered (6.3 ) (11.0 ) (24.1 ) (28.3 )
Wood Products
Other 0.2 (2.5 ) 2.3 (5.2 )
Other
operating 1.6 (1.6 ) 7.3 (67.7 )
credits and
charges, net
Gain (loss) on sales
of and impairment of 1.2 (9.8 ) 2.1 (9.5 )
long-lived assets
General
corporate and (17.7 ) (22.7 ) (55.4 ) (68.8 )
other
expenses, net
Foreign
currency gain 1.0 2.3 10.3 6.6
(losses)
Gain on early
debt (0.2 ) - 0.4 -
extinguishment
Other than
temporary (0.1 ) (88.7 ) (1.8 ) (91.2 )
investment
impairment
Investment 7.4 8.1 20.1 31.5
income
Interest
expense, net (20.4 ) (12.4 ) (53.3 ) (36.3 )
of capitalized
interest
Loss from
operations (23.2 ) (161.4 ) (115.9 ) (379.4 )
before taxes
Benefit for (10.5 ) (61.0 ) (45.7 ) (153.7 )
income taxes
Loss from
continuing $ (12.7 ) $ (100.4 ) $ (70.2 ) $ (225.7 )
operations
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
Quarter Ended September 30, Nine Months Ended September
30,
2009 2008 2009 2008
Oriented strand
board, million 788 1,037 1,870 3,134
square feet 3/8"
basis(1)
Oriented strand
board, million 54 61 154 227
square feet 3/8"
basis
(produced by
wood-based siding
mills)
Wood-based siding,
million square feet 194 208 540 643
3/8" basis
Engineered I-Joist,
million lineal feet 21 26 46 66
(1)
Laminated veneer
lumber (LVL), 710 1,588 1,665 4,731
thousand cubic (1)
(1) Includes volumes produced by joint venture operations or under sales
arrangements and sold to LP.
Source: Louisiana-Pacific Corporation
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