Louisiana-Pacific Beats, Pares Loss - Analyst Blog

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Louisiana-Pacific Corporation ( LPX ) reported an adjusted loss of 6 cents per share in the first quarter of 2012, narrower than a loss of 12 cents per share in the same quarter of 2011 as well as the Zacks Consensus Estimate of a loss of 15 cents. The narrower loss was attributable to a better top line in the quarter with the gradual recovery in the overall housing market.

Net sales in the quarter improved 9% to $362 million. Revenues also beat the Zacks Consensus Estimate of $341 million due to strong performance in almost all operating segments, especially in Siding.

Adjusted EBITDA from continuing operations was $21 million versus $13 million in the prior-year quarter.

Segment Details

Oriental Strand Board (OSB): Louisiana-Pacific's OSB segment manufactures and distributes OSB structural panel products. Sales in the segment grew 13% to $149 million in the quarter. The segment witnessed volume growth of 4% and a pricing tailwind of 6%. The segment nonetheless recorded an operating loss of $0.3 million in the quarter, albeit better than a loss of $9.1 million in the prior-year quarter due to pricing benefits.

Composite Wood Products/Siding: The Siding segment manufactures wood-based siding (SmartSide and CanExel siding) and related accessories that are used for new constructions as well as in repair and remodeling. Sales in the Siding segment improved 6.5% to $113.1 million benefiting from increased housing activity in the quarter.

The average sales price of SmartSide was up 2% year over year while that of CanExel was down 6%. Volume improved by 9% for SmartSide year over year driven by better sales in the retail, repair and remodel markets. The CanExel siding volume was down 5% due to lower shipments in Europe and weakness in the Canadian housing market.

The segment recorded an operating gain of $16.8 million in the quarter, up from $12.7 million recorded in the prior-year quarter.

Engineered Wood Products (EWP): The EWP segment makes I-Joists, laminated veneer lumber (LVL) and laminated strand lumber (LSL) which is primarily used in new construction activities. Sales in the Engineered Wood Products increased slightly to $48.6 million in the quarter.

Volumes of I-Joists were up 2% while volumes of LVL and LSL were up 14%, both driven by better demand. Pricing was up 3% in I-Joists but down 1% in LVL and LSL. The segment recorded an operating loss of $2.8 million in the quarter, an improvement from a loss of $5.5 million recorded in the prior-year quarter.

South America: The segment manufactures OSB structural panel and siding products in Chile and Brazil. Segment sales surged 20% to $42.4 million. Volumes in Chile were up 14%, while volumes in Brazil were up 2%. Pricing was up 10% in Chile and down 6% in Brazil. The segment recorded operating income of $3.1 million in the quarter, lower than $3.6 million recorded in the prior-year quarter.

Other Products : The segment comprises Louisiana-Pacific's molding business and the US GreenFiber joint venture that makes cellulose insulation and various other non-operating facilities. Sales in the segment were $10.0 million, down 5% over the prior-year quarter. The segment recorded an operating loss of $0.7 million in the quarter, flat with the prior-year quarter.

2012 Outlook

Louisiana-Pacific is optimistic now with the housing market on a recovery mode. Management believes it will be able to take advantage of the incremental demand from the housing upturn as it has the necessary capacity in all its businesses.

Louisiana-Pacific is planning to spend approximately $25 million for capital expenditures in 2012.

Our Recommendation

Currently, we hold a Zacks #3 Rank (short-term Hold rating) on Louisiana-Pacific. Over the long term, we provide a Neutral recommendation on the stock.


 
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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 The NASDAQ OMX Group, Inc.



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Referenced Stocks: EWP , LPX , LVL

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