A month has gone by since the last earnings report for Louisiana-Pacific (LPX). Shares have added about 8.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Louisiana-Pacific due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Louisiana-Pacific Q3 Earnings & Net Sales Top Estimates, Guidance Up
Louisiana-Pacific Corporation, or LP, reported impressive third-quarter 2024 results. Earnings and net sales beat the respective Zacks Consensus Estimate. Although the metrics decreased on a year-over-year basis, LP outpaced the guidance it previously provided for the quarter.
Backed by the solid execution of its strategy to drive growth, margin, specialization, and efficiency in the third quarter, the Siding segment generated record net sales and adjusted EBITDA. The OSB segment also delivered strong results amid a challenging price environment, backed by operational efficiency, cost control and outstanding safety.
Detailed Discussion
Louisiana-Pacific reported adjusted earnings per share (EPS) of $1.22, which beat the Zacks Consensus Estimate of 88 cents by 38.6%. The bottom line decreased 20.7% from the year-ago quarter’s figure of $1.62.
Net sales of $722 million topped the consensus estimate of $700 million by 3.2% but slipped 0.8% from the prior-year figure of $728 million.
Adjusted EBITDA of $153 million was down 19.5% from the prior-year quarter due to lower OSB selling prices, partially offset by higher Siding net sales. Nonetheless, LP exceeded the previously provided guidance of $105-$125 million.
Segmental Analysis
Siding: The segment’s sales of $420 million increased 22% from the prior-year period. A 6% rise in the average net selling price and a 15% increase in volume from the prior-year level led to the improvement. Earlier, LP expects Siding Solutions’ revenues to grow in the band of 16-18% from the year-ago period.
Adjusted EBITDA was $123 million, a 72% increase from $71 million reported a year ago. The growth was attributable to higher net sales and the non-recurrence of a manufacturing press rebuild in 2023.
OSB: Sales in the segment decreased 24% year over year to $253 million, owing to a decline in OSB prices of 27%, partially offset by 2% higher volumes. Also, 3% lower shipments in OSB-Structural Solutions were offset by 8% growth in OSB-Commodity.
The segment’s adjusted EBITDA plunged 72% year over year to $33 million due to lower OSB prices.
LP South America (LPSA): Sales of $47 million rose 4% year over year. Adjusted EBITDA increased 41% from the year-ago quarter to $9 million due to higher sales volumes offset by unfavorable currency fluctuations.
Financials
At the third-quarter end, Louisiana-Pacific had $896 million in liquidity. As of Sept. 30, 2024, cash and cash equivalents were $346 million compared with $222 million in 2023-end. Long-term debt was $347 million, which aligned with the 2023-end level.
In the first nine months of 2024, net cash provided by operations was $500 million compared with $157 million a year ago.
During the third quarter, LPX repurchased 0.8 million of its common shares for a total of $73 million. As of September-end, about $262 million remained under the pre-existing share repurchase authorizations.
Q4 Outlook
LP expects Siding Solutions’ revenues to grow in the band of 9-10% from the year-ago period.
The company anticipates consolidated adjusted EBITDA in the range of $85-$105 million, of which, $70-$80 million is likely to be contributed by Siding and $15-$25 million is anticipated to be added by OSB.
2024 Guidance Raised
The company now expects Siding Solutions’ revenues to rise nearly 17% year over year, up from the prior expected range of 14-16%.
LPX now projects consolidated adjusted EBITDA in the range of $655-$675 million compared with the prior projection of $580-$620 million. Of the guided range, $390-$400 million is likely to be contributed by Siding and $265-$275 million is likely to be added by OSB. Siding adjusted EBITDA was previously expected to be within $355-$375, while OSB was expected to be between $225 million and $245 million.
LPX anticipates capital expenditures between $195 million and $205 million compared with the prior projection of $200-$220 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 10.89% due to these changes.
VGM Scores
Currently, Louisiana-Pacific has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Louisiana-Pacific has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Louisiana-Pacific belongs to the Zacks Building Products - Wood industry. Another stock from the same industry, Boise Cascade (BCC), has gained 3.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Boise Cascade reported revenues of $1.71 billion in the last reported quarter, representing a year-over-year change of -6.6%. EPS of $2.33 for the same period compares with $3.58 a year ago.
For the current quarter, Boise Cascade is expected to post earnings of $1.80 per share, indicating a change of -26.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -4.4% over the last 30 days.
Boise Cascade has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Today, See These 5 Potential Home Runs >>Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
