Norbord (OSB) Misses Q1 EPS by 75c, Revenues Miss

Norbord (NYSE: OSB) reported Q1 EPS of $0.25, $0.75 worse than the analyst estimate of $1.00. Revenue for the quarter came in at $467 million versus the consensus estimate of $532.58 million.

Q1 2020 HIGHLIGHTS

• Adjusted EBITDA of $75 million and Adjusted earnings of $0.26 per diluted share
• Reduced North American unit manufacturing costs by 2% quarter-over-quarter and 4%year-over-year
• Liquidity of $247 million at quarter-end, after $69 million seasonal investment in working capital
• Declared quarterly variable dividend of C $0.05 per share for shareholders of record on June 1, 2020
• Implemented COVID-19 Response Plan and related adjustments to operating configuration and cash conservation measures

"The first quarter of this year was off to a strong start, as the improved housing activity in late 2019 carried into 2020. In fact, our Adjusted EBITDA almost doubled from year-ago levels and was our best result in six quarters," said Peter Wijnbergen, Norbord's President & CEO. "The quarter would have been even better but for the effects of the COVID-19 pandemic, which began to impact demand from a number of our customers towards the end of March. In spite of the immediate challenges presented by COVID-19, I am pleased with our company's ability to respond appropriately and adapt quickly. Our employees have demonstrated resilience in the face of uncertainty and changing workplace conditions, as well as flexibility to continue meeting the needs of our customers. No one knows how this pandemic will ultimately unfold, but the team at Norbord has been working diligently to build contingency plans and has taken decisive actions to retain operating flexibility, preserve jobs for as many employees as practicable, and ensure we are prepared for a return to growth when market conditions improve. Most importantly, we are doing all this while keeping the health and safety of our employees front and centre as our top priority."

Business Outlook

While there remains considerable uncertainty around the depth and duration of the economic impact of the ongoing COVID-19 pandemic, a number of Norbord's markets, in particular Germany and North American repair-and-remodeling, have to-date been more resilient than expected. The Company will continue to adjust operations as needed and prudently manage costs and capital expenditures to protect balance sheet flexibility. The Company will also consider additional means to conserve cash, augment existing liquidity and will avail itself, as appropriate, of government support programs where eligible in the regions in which it operates.

"Though the decisions to curtail production across the Company under Norbord's COVID-19 Response Plan are difficult, they are also necessary, reflecting the broader economic uncertainties," added Mr. Wijnbergen. "Our management team has depth of experience in this industry and a proven track record of operating through difficult market conditions. Norbord has a conservative balance sheet with adequate liquidity, an operating configuration with considerable flexibility, committed employees and the necessary resolve to be agile in meeting the challenges that lay ahead."

For earnings history and earnings-related data on Norbord (OSB) click here.

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