Louisiana-Pacific (LPX) Announces $600M Share Buyback

Louisiana-Pacific Corporation (LP) (NYSE: LPX) today reported its financial results for the three months ended March 31, 2022.

Key Highlights for the First Quarter, Compared to the First Quarter of the Prior Year

• Net sales increased by 31% to $1,337 million
• Siding Solutions net sales increased by 17% to $330 million
• OSB net sales increased by 38% to $744 million
• Net income attributed to LP increased by $164 million to $484 million ($5.60 per diluted share)
• Adjusted Diluted EPS(1) was $5.08 per share, an increase of $2.07 per share
• Adjusted EBITDA(1) was $636 million, an increase of $174 million
• Cash provided by operating activities was $425 million, an increase of $111 million

(1) This is a non-GAAP financial measure. See "Use of Non-GAAP Information" and "Reconciliation of Net Income to Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Income, and Non-GAAP Adjusted Diluted EPS" below.

Capital Allocation Update

• For the quarter, LP paid $104 million to repurchase 1.5 million of its common shares, leaving 84.5 million common shares outstanding at March 31, 2022
• Paid $92 million of capital expenditures during the first quarter
• Paid $19 million in cash dividends during the first quarter
• Cash of $637 million as of March 31, 2022
• Declared a quarterly cash dividend of $0.22 per share
• As of May 3, 2022, LP has paid a further $182 million to repurchase 2.9 million common shares, leaving $214 million remaining under the pre-existing $500 million share repurchase authorization
• Common shares outstanding as of May 3, 2022, 81.6 million
• Additional authorization of $600 million to repurchase LP common stock, bringing total authorized for share repurchases to $814 million as of May 3, 2022

"Siding Solutions sales grew at 17% to set a quarterly record while achieving a 25% EBITDA margin despite inflationary headwinds and simultaneous capacity expansion projects," said LP Chair and Chief Executive Officer Brad Southern. "LP SmartSide siding production began on time at our Houlton, Maine facility. Higher prices for OSB and EWP helped LP achieve its second-highest quarter for adjusted EBITDA, and our ongoing share repurchases resulted in a record quarterly adjusted earnings per share."

First Quarter 2022 Highlights

Net sales for the first quarter of 2022 increased year-over-year by $320 million (or 31%). This included Siding Solutions growth of $48 million (or 17%), a $205 million (38%) increase in OSB revenue (23% higher OSB prices and 12% higher volumes, primarily driven by the Peace Valley mill restart), a $47 million (38%) increase in EWP revenue due to price increases in response to significantly higher input costs, and a $14 million (26%) increase in revenue in South America.

Net income attributed to LP for the first quarter of 2022 increased year-over-year by $164 million (or 51%) to $484 million ($5.60 per diluted share). The increase reflects a $39 million gain associated with the sale of the 50% equity interest in two joint ventures that produce I-Joists, the non-recurrence of debt extinguishment losses of $11 million in the prior year, and a $174 million increase in Adjusted EBITDA.

Segment Results

Siding

The Siding segment serves diverse end markets with a broad product offering of engineered wood siding, trim, and fascia, including LP® SmartSide® Trim & Siding, LP SmartSide® ExpertFinish® Trim & Siding, LP® BuilderSeries® Lap Siding, and LP® Outdoor Building Solutions® (collectively referred to as Siding Solutions).

Segment sales and Adjusted EBITDA for this segment were as follows:

Siding Solutions price increases and higher sales of innovative products drove increases in both average net selling price and sales volume, resulting in 17% growth in Siding Solutions net sales. The decrease in Adjusted EBITDA of $7 million reflects price and volume growth, offset by $26 million of raw material and freight cost inflation and $12 million of discretionary investments in support of future growth, including Houlton start up and sales and marketing costs.

Oriented Strand Board (OSB)

The OSB segment manufactures and distributes OSB structural panel products including the value-added OSB portfolio known as LP Structural Solutions (LP® TechShield® Radiant Barrier, LP WeatherLogic® Air & Water Barrier, LP Legacy® Premium Sub-Flooring, and LP® FlameBlock® Fire-Rated Sheathing) and LP® TopNotch® Sub-Flooring. OSB is manufactured using wood strands arranged in layers and bonded with resins.

Segment sales and Adjusted EBITDA for this segment were as follows:

OSB average net selling prices increased year-over-year by 23% and OSB sales volume increased year-over-year by 12%, resulting in 38% net sales growth. The increase in Adjusted EBITDA of $151 million reflects $130 million from higher prices and $42 million from higher sales volumes (primarily Structural Solutions), and $20 million of increased raw material costs.

Engineered Wood Products (EWP)

The EWP segment is comprised of LP® SolidStart® I-Joist (I-Joist), Laminated Veneer Lumber (LVL), and other related products. This segment also includes the sales of plywood produced as an ancillary product of the LVL production process and I-Joist products produced by our two joint venture, in which LP sold its equity stake during the three months ended March 31, 2022.

During 2021, LP ceased production of Laminated Strand Lumber (LSL) at the Houlton, Maine facility to begin the conversion of that facility to Siding Solutions production.

Segment sales and Adjusted EBITDA for this segment were as follows:

Net sales for EWP increased year-over-year primarily due to price increases in response to significantly higher input costs, partially offset by the discontinuation of LSL production. Resulting increases in Adjusted EBITDA reflect the net effect of these price and cost increases.

South America

LP's South America segment manufactures and distributes OSB structural panel and siding products in South America and certain export markets. This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, Colombia, Argentina, and Paraguay.

Segment sales and Adjusted EBITDA for this segment were as follows:

Net sales in South America increased year-over-year predominantly due to higher OSB and siding prices. Increased Adjusted EBITDA reflects the effect of these price increases, partially offset by higher costs of raw materials.

Q2 2022 Outlook and 2022 Capital Expenditure Guidance

Our guidance is based on current plans and expectations and is subject to a number of known and unknown uncertainties and risks, including those set forth below under "Forward-Looking Statements."

• Siding Solutions second quarter of 2022 year-over-year revenue growth expected to be greater than 20%
• OSB revenue in the second quarter of 2022 expected to be sequentially lower than the first quarter of 2022 by about 7%, assuming that OSB prices published by Random Lengths remain unchanged from those published on April 29, 2022. This an assumption for modeling purposes and not a price forecast.
• Adjusted EBITDA(2) for the second quarter of 2022 expected to be greater than $540 million
• Siding Solutions full-year 2022 expected year-over-year revenue growth updated to be greater than 20%
• Given our current outlook, capital expenditures for 2022 are expected to be in the range of $400 million to $430 million, including $200 million to $210 million for the mill conversions, $120 million to $130 million for sustaining maintenance, and $80 million to $90 million for other strategic growth projects

(2) This is a non-GAAP financial measure. With respect to Adjusted EBITDA for the second quarter of 2022, certain items that affect net income on a GAAP basis, such as product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, and other non-operating items, that would be required to be included in the comparable forecasted GAAP measures without unreasonable effort. As such, the Company is unable to provide a reasonable estimate of GAAP net income, or a corresponding reconciliation of Adjusted EBITDA to net income.

Conference Call

LP will hold a conference call to discuss this release today at 11 a.m. Eastern Time (8 a.m. Pacific Time). Investors will have the opportunity to listen to the conference call live by dialing 855-638-4813 (U.S.) or 704-288-0619 (international) and enter the access code 4028024 or over the internet by going to investor.lpcorp.com and clicking "Events and Presentations" at least 15 minutes early to register and download and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available from 2 p.m. Eastern Time on May 3, 2022 to 2 p.m. Eastern Time on May 10, 2022 by calling 855-859-2056 and entering the access code 4028024, and the replay will also be available on LP's website.

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