LP Reports First Quarter 2019 Results; Provides Strategic Update and Reaffirms 2019 Guidance
First Quarter Results
-
Net sales for the first quarter of
$582 million , 16 percent lower than the prior year. - SmartSide® sales increased 13 percent compared to the first quarter of 2018.
- Overall OSB price realization dropped 29 percent.
-
Net income attributed to LP for the first quarter was
$27 million ($0.20 per diluted share). -
Non-GAAP adjusted income from continuing operations was
$17 million ($0.13 per diluted share). -
Adjusted EBITDA for the first quarter was
$58 million .
Strategic Update and Execution of Capital Allocation Plan
- LP re-affirms its long-term SmartSide Strand revenue growth target of 12-14 percent.
-
Reporting
$8 million in operational improvements and supply chain optimization towards 2021 target of$75 million . -
Paid
$438 million in the first quarter as part of share repurchase programs. -
Paid
$17 million quarterly cash dividend and announced an additional$0.135 per share dividend.
First Quarter Performance
“Although the first quarter results were impacted by increasing macro
environment headwinds, our transformation into a leading building
solutions company continues,” said
Strategic Update
LP sees continued growth opportunities in its Siding business and is
re-affirming its long term SmartSide Strand revenue growth target of
12-14 percent. In addition, LP reports operational improvements through
overall equipment effectiveness (OEE) and supply chain optimization of
$40 million from sustainable improvement in Overall Equipment Effectiveness across its Siding and OSB mills;-
Approximately
$25 million from supply chain optimization across its$1.1 billion of addressable spend (approximately$8 million of incremental impact annually); and $10 million from its investment in line management and infrastructure optimization.
Execution of Capital Allocation Plan
During the quarter, LP entered into a
First Quarter Results
For the first quarter of 2019, LP reported net sales of
Segment Results
Siding
The Siding segment consists of LP SmartSide® trim and siding, LP
CanExel® prefinished siding, as well as LP Outdoor Building Solutions®
innovative products for premium outdoor buildings. The Siding segment
reported net sales of
Oriented Strand Board
The OSB segment manufactures and distributes OSB structural panel
products including
Engineered Wood Products (EWP)
The EWP segment is comprised of LP SolidStart® I-Joist (IJ), Laminated
Veneer Lumber (LVL) and Laminated Strand Lumber (LSL) and other related
products. The EWP segment reported net sales of
The
2019 Guidance
LP’s 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 in LP’s “Forward-Looking Statements.”
-
Given its current outlook, LP expects capital expenditures for 2019 to
be in the range of
$150 million to $180 million . - LP is maintaining its long-term growth target of 12-14 percent on SmartSide Strand sales growth but is guiding to the lower end of the range for 2019 based upon projected flat housing starts.
About LP Building Solutions
As a proven leader in high-performance building solutions,
FORWARD LOOKING STATEMENTS
This news release contains statements concerning
Use of Non-GAAP information
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release discloses segment earnings (loss) from continuing operations before interest expense, taxes, depreciation and amortization and exclude stock based compensation expense, (gain) loss on sales or impairment of long-lived assets, other operating credits and charges, net, loss on early debt extinguishment, investment income and other non-operating items as Adjusted EBITDA which is a non-GAAP financial measure. It also discloses Adjusted income from continuing operations which excludes (gain) loss on sale or impairment of long-lived assets, interest outside of normal operations, other operating credits and charges, net, early debt extinguishment and adjusts for a normalized tax rate. Adjusted EBITDA and Adjusted income from continuing operations are not a substitute for the GAAP measure of net income or operating cash flows or other GAAP measures of operating performance or liquidity.
LP has Adjusted EBITDA in this press release because it uses this as important supplemental measure of our performance and believe that similarly-titled measures are frequently used by securities analysts, investors and other interested persons in the evaluation of companies in our industry, some of which present similarly-titled measures when reporting their results. LP uses Adjusted EBITDA to evaluate its performance as compared to other companies in its industry that have different financing and capital structures and/or tax rates. It should be noted that companies calculate similarly-titled measures differently and, therefore, as presented by LP may not be comparable to similarly-titled measures reported by other companies. In addition, Adjusted EBITDA has material limitations as a performance measure because it excludes interest expense, income tax (benefit) expense and depreciation and amortization which are necessary to operate our business or which LP otherwise incurred or experienced in connection with the operation of its business.
LP believes that Adjusted income from continuing operations, which excludes (gain) loss on sale or impairment of long-lived assets, interest outside of normal operations, other operating credits and charges, net and early debt extinguishment, adjusted for a normalized tax rate is a useful measure for evaluating our ability to generate earnings and that providing this measure will allow investors to more readily compare the earnings referred to in the press release to our earnings for past and future periods. LP believes that this measure is particularly useful where the amounts of the excluded items are not consistent between the periods presented. It should be noted that other companies may present similarly-titled measures differently and, therefore, as presented by LP may not be comparable to similarly-titled measures reported by other companies. In addition, Adjusted income (loss) from continuing operations has material limitations as a performance measure because it excludes items that are actually incurred or experienced in connection with the operations of its business.
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
| LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES | |||||||||||
| (Dollar amounts in millions, except per share amounts) (Unaudited) | |||||||||||
| Quarter Ended | |||||||||||
| March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Net sales | $ | 582 | $ | 691 | |||||||
| Cost of sales | 501 | 515 | |||||||||
| Gross profit | 81 | 177 | |||||||||
| Selling, general and administrative expenses | 57 | 51 | |||||||||
| (Gain) loss on sale or impairment of long lived assets, net | 1 | (1 | ) | ||||||||
| Other operating credits and charges, net | 2 | — | |||||||||
| Income from operations | 22 | 127 | |||||||||
| Non-operating income (expense): | |||||||||||
| Interest expense, net of capitalized interest | (4 | ) | (4 | ) | |||||||
| Investment income | 5 | 3 | |||||||||
| Other non-operating items | 11 | (1 | ) | ||||||||
| Total non-operating income (expense) | 12 | (3 | ) | ||||||||
| Income from continuing operations before taxes | 34 | 125 | |||||||||
| Provision for income taxes | 7 | 30 | |||||||||
| Income from continuing operations | 26 | 95 | |||||||||
| Loss from discontinued operations | — | (4 | ) | ||||||||
| Net income | 26 | 91 | |||||||||
| Less: Net loss attributed to non-controlling interest | — | — | |||||||||
| Net income attributed to Louisiana-Pacific Corporation | $ | 27 | $ | 91 | |||||||
| Amounts attributed to Louisiana-Pacific Corporation shareholders: | |||||||||||
| Income from continuing operations, net of tax | 27 | 95 | |||||||||
| Income from discontinued operations, net of tax | — | (4 | ) | ||||||||
| $ | 27 | $ | 91 | ||||||||
| Net income per share of common stock: | |||||||||||
| Income from continuing operations | $ | 0.20 | $ | 0.66 | |||||||
| Loss from discontinued operations | — | (0.03 | ) | ||||||||
| Net income per share - basic | $ | 0.20 | $ | 0.63 | |||||||
| Diluted net income per share of common stock: | |||||||||||
| Income from continuing operations | $ | 0.20 | $ | 0.65 | |||||||
| Loss from discontinued operations | — | (0.03 | ) | ||||||||
| Net income per share - diluted | $ | 0.20 | $ | 0.62 | |||||||
| Weighted average shares of stock outstanding - basic | 131 | 145 | |||||||||
| Weighted average shares of stock outstanding - diluted | 132 | 147 | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES | |||||||||||
| (Dollar amounts in millions) (Unaudited) | |||||||||||
| March 31, 2019 | December 31, 2018 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 361 | $ | 878 | |||||||
|
Receivables, net of allowance for doubtful accounts of $2 million at March 31, 2019 and $1 million at December 31, 2018 |
166 | 128 | |||||||||
| Inventories | 310 | 273 | |||||||||
| Prepaid expenses and other current assets | 9 | 8 | |||||||||
| Total current assets | 846 | 1,287 | |||||||||
| Timber and timberlands | 56 | 62 | |||||||||
| Property, plant and equipment, net | 1,031 | 1,010 | |||||||||
| Goodwill and other intangible assets | 48 | 26 | |||||||||
| Operating lease assets | 23 | — | |||||||||
| Investments in and advances to affiliates | 9 | 49 | |||||||||
| Restricted cash | 14 | 13 | |||||||||
| Other assets | 65 | 61 | |||||||||
| Deferred tax asset | 3 | 4 | |||||||||
| Total assets | $ | 2,094 | $ | 2,514 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current portion of long-term debt | $ | 5 | $ | 5 | |||||||
| Accounts payable and accrued liabilities | 229 | 233 | |||||||||
| Income taxes payable | 1 | 21 | |||||||||
| Current portion of contingency reserves | 2 | 2 | |||||||||
| Total current liabilities | 238 | 262 | |||||||||
| Long-term debt, excluding current portion | 347 | 347 | |||||||||
| Deferred income taxes | 70 | 62 | |||||||||
| Non-current operating lease liabilities | 14 | — | |||||||||
| Contingency reserves, excluding current portion | 8 | 9 | |||||||||
| Other long-term liabilities | 131 | 135 | |||||||||
| Redeemable noncontrolling interest | 14 | — | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 141 | 153 | |||||||||
| Additional paid-in capital | 373 | 458 | |||||||||
| Retained earnings | 1,314 | 1,613 | |||||||||
| Treasury stock | (412 | ) | (378 | ) | |||||||
| Accumulated comprehensive loss | (144 | ) | (146 | ) | |||||||
| Total stockholders’ equity | 1,273 | 1,700 | |||||||||
| Total liabilities and stockholders’ equity | $ | 2,080 | $ | 2,514 | |||||||
| CONSOLIDATED CASH FLOW STATEMENT | |||||||||||
| LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES | |||||||||||
| (Dollar amounts in millions) (Unaudited) | |||||||||||
| Quarter Ended | |||||||||||
| March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 26 | $ | 91 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 31 | 31 | |||||||||
| Equity in (income) loss of unconsolidated affiliates, including dividends | (2 | ) | (1 | ) | |||||||
| (Gain) loss on sale or impairment of long-lived assets, net | 1 | (1 | ) | ||||||||
| Other operating credits and charges, net | 2 | — | |||||||||
| Gain on acquisition | (14 | ) | — | ||||||||
| Stock-based compensation related to stock plans | 2 | 2 | |||||||||
| Exchange (gain) loss on remeasurement | 2 | — | |||||||||
| Cash settlements of warranties, net of accruals | (1 | ) | 4 | ||||||||
| Pension expense, net of contributions | 1 | 2 | |||||||||
| Other adjustments, net of acquisition | — | 1 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| (Increase) decrease in receivables | (35 | ) | (29 | ) | |||||||
| (Increase) decrease in inventories | (36 | ) | (54 | ) | |||||||
| (Increase) decrease in prepaid expenses | — | (1 | ) | ||||||||
| Increase (decrease) in accounts payable and accrued liabilities | (15 | ) | (38 | ) | |||||||
| Increase (decrease) in income taxes payable and deferred income taxes | (15 | ) | 25 | ||||||||
| Net cash used in operating activities | (54 | ) | 31 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Property, plant and equipment additions | (43 | ) | (43 | ) | |||||||
| Proceeds from sales of assets | — | 1 | |||||||||
| Cash acquired in acquisition | 40 | — | |||||||||
| Other investing activities | (1 | ) | — | ||||||||
| Net cash used in investing activities | (5 | ) | (43 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Payment of cash dividends | (17 | ) | (19 | ) | |||||||
| Purchase of stock | (438 | ) | — | ||||||||
| Taxes paid related to net share settlement of equity awards | (4 | ) | (6 | ) | |||||||
| Other financing activities | — | 3 | |||||||||
| Net cash used in financing activities | (459 | ) | (22 | ) | |||||||
| EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | — | 1 | |||||||||
| Net increase in cash, cash equivalents and restricted cash | (517 | ) | (32 | ) | |||||||
| Cash, cash equivalents and restricted cash at beginning of period | 892 | 941 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 375 | $ | 909 | |||||||
| LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES | |||||||||||
| SELECTED SEGMENT INFORMATION | |||||||||||
| (Dollar amounts in millions) (Unaudited) | |||||||||||
| Quarter Ended | |||||||||||
| March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Net sales: | |||||||||||
| Siding | $ | 236 | $ | 227 | |||||||
| OSB | 208 | 313 | |||||||||
| EWP | 90 | 106 | |||||||||
| South America | 45 | 42 | |||||||||
| Other | 4 | 3 | |||||||||
| Intersegment sales | (2 | ) | — | ||||||||
| $ | 582 | $ | 691 | ||||||||
| Operating profit (loss): | |||||||||||
| Siding | $ | 33 | $ | 36 | |||||||
| OSB | (8 | ) | 89 | ||||||||
| EWP | 3 | — | |||||||||
| South America | 8 | 9 | |||||||||
| Other | (4 | ) | (2 | ) | |||||||
| Other operating credits and charges, net | (2 | ) | — | ||||||||
| Gain (loss) on sale or impairment of long-lived assets, net | (1 | ) | 1 | ||||||||
| General corporate and other expenses, net | (8 | ) | (6 | ) | |||||||
| Interest expense, net of capitalized interest | (4 | ) | (4 | ) | |||||||
| Investment income | 5 | 3 | |||||||||
| Other non-operating items | 11 | (1 | ) | ||||||||
| Income from continuing operations before taxes | 34 | 125 | |||||||||
| Provision for income taxes | 7 | 30 | |||||||||
| Income from continuing operations | $ | 26 | $ | 95 | |||||||
| LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES | |||||||
| KEY STATISTICS | |||||||
| Quarter Ended March 31, | |||||||
| Housing starts1: | 2019 | 2018 | |||||
| Single Family | 185 | 194 | |||||
| Multi-Family | 76 | 95 | |||||
| 261 | 289 | ||||||
1 Actual U.S. Housing starts data reported by
The following table sets forth
| Quarter Ended March 31, 2019 | Quarter Ended March 31, 2018 | ||||||||||||||||||||||||
| Sales Volume | Siding | OSB | EWP | Total | Siding | OSB | EWP | Total | |||||||||||||||||
| SmartSide® Strand siding (MMSF) | 284 | — | — | 284 | 262 | — | — | 284 | |||||||||||||||||
| SmartSide® fiber siding (MMSF) | 53 | — | — | 53 | 56 | — | — | 53 | |||||||||||||||||
| CanExel® siding (MMSF) | 15 | — | — | 15 | 13 | — | — | 15 | |||||||||||||||||
| OSB - commodity (MMSF) | 17 | 571 | 9 | 597 | 31 | 616 | 11 | 597 | |||||||||||||||||
| OSB - value added (MMSF) | 1 | 390 | 5 | 396 | 27 | 383 | 11 | 396 | |||||||||||||||||
| LVL (MCF) | — | — | 1,504 | 1,504 | — | — | 1,902 | 1,504 | |||||||||||||||||
| LSL (MCF) | — | — | 797 | 797 | — | — | 877 | 797 | |||||||||||||||||
| I-joist (MMLF) | — | — | 18 | 18 | — | — | 24 | 18 | |||||||||||||||||
|
Reconciliation of Net income to Adjusted EBITDA |
||||||||||||||||||||||||||||||||||||
|
Quarter Ended March 31, 2019 |
Siding | OSB | EWP |
South |
Other | Corporate | Total | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 33 | $ | (8 | ) | $ | 3 | $ | 8 | $ | (4 | ) | $ | (6 | ) | $ | 26 | |||||||||||||||||||
| Loss from discontinued operations, net of tax | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Income (loss) from continuing operations attributable to LP | 33 | (8 | ) | 3 | 8 | (3 | ) | (6 | ) | 27 | ||||||||||||||||||||||||||
| Provision for income taxes | — | — | — | — | — | 7 | 7 | |||||||||||||||||||||||||||||
| Interest expense, net of capitalized interest | — | — | — | — | — | 4 | 4 | |||||||||||||||||||||||||||||
|
Depreciation and amortization |
9 | 15 | 4 | 2 | 1 | — | 31 | |||||||||||||||||||||||||||||
| Stock-based compensation expense | 1 | 1 | — | — | — | 1 | 2 | |||||||||||||||||||||||||||||
| Loss on sale or impairment of long-lived assets, net | — | — | — | — | — | 1 | 1 | |||||||||||||||||||||||||||||
| Investment income | — | — | — | — | — | (5 | ) | (5 | ) | |||||||||||||||||||||||||||
| Other operating credits and charges, net | — | — | — | — | — | 2 | 2 | |||||||||||||||||||||||||||||
| Other non-operating items | — | — | — | — | — | (11 | ) | (11 | ) | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 42 | $ | 8 | $ | 7 | $ | 10 | $ | (2 | ) | $ | (7 | ) | $ | 58 | ||||||||||||||||||||
| Adjusted EBITDA Margin | 18 | % | 4 | % | 8 | % | 23 | % | (55 | )% | NA | 10 | % | |||||||||||||||||||||||
|
Quarter Ended March 31, 2018 (Dollar amounts in millions) |
Siding | OSB | EWP |
South |
Other | Corporate | Total | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 36 | $ | 89 | $ | — | $ | 9 | $ | (6 | ) | $ | (37 | ) | $ | 91 | ||||||||||||||||||||
| Loss from discontinued operations before taxes | — | — | — | — | 5 | — | 5 | |||||||||||||||||||||||||||||
| Benefit for income taxes | — | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||||||||||||||
| Income (loss) from continuing operations | 36 | 89 | — | 9 | (2 | ) | (37 | ) | 95 | |||||||||||||||||||||||||||
| Provision for income taxes | — | — | — | — | — | 30 | 30 | |||||||||||||||||||||||||||||
| Interest expense, net of capitalized interest | — | — | — | — | — | 4 | 4 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 9 | 15 | 5 | 2 | — | — | 31 | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | 1 | — | — | — | 1 | 2 | |||||||||||||||||||||||||||||
| Gain on sale or impairment of long-lived assets, net | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||||||||||
| Investment income | — | — | — | — | — | (3 | ) | (3 | ) | |||||||||||||||||||||||||||
| Other operating credits and charges, net | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Other non-operating items | — | — | — | — | — | 1 | 1 | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 45 | $ | 105 | $ | 5 | $ | 11 | $ | (2 | ) | $ | (5 | ) | $ | 159 | ||||||||||||||||||||
| Adjusted EBITDA Margin | 20 | % | 33 | % | 5 | % | 26 | % | (75 | )% | NA | 23 | % | |||||||||||||||||||||||
Reconciliation of Net income to Adjusted income from continuing operations
| Quarter Ended | |||||||||||
| March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Net income | $ | 26 | $ | 91 | |||||||
| Add (deduct): | |||||||||||
| Net loss attributed to noncontrolling interest | — | — | |||||||||
| Loss from discontinued operations | — | 4 | |||||||||
| (Gain) loss on sale or impairment of long-lived assets, net | 1 | (1 | ) | ||||||||
| Other operating credits and charges, net | 2 | — | |||||||||
| Gain on acquisition | (14 | ) | — | ||||||||
| Reported tax provision | 7 | 30 | |||||||||
| Normalized tax provision at 25% | (6 | ) | (31 | ) | |||||||
| Adjusted income from continuing operations | $ | 17 | $ | 93 | |||||||
| Diluted shares outstanding | 132 | 147 | |||||||||
| Adjusted income from continuing operations per diluted share | $ | 0.13 | $ | 0.63 | |||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190507005273/en/
Source:
Mark Morrison (Media Relations)
615.986.5886
Becky
Barckley/Mike Kinney (Investor Relations)
615.986.5600