) third-quarter 2013 adjusted earnings per share from continuing
operations of 13 cents missed the Zacks Consensus Estimate of 16
cents by 18.8% and the year-ago quarter's earnings of 20 cents by
35%. Earnings in the quarter were under pressure due to lower
pricing in the Oriental Strand Board (OSB) product and reduced
earnings before interest, taxes, depreciation and amortization
Net sales in the quarter increased 9.8% year over year to
$507.4 million with the rise in volume and prices across all
segments, except the OSB segment. Revenues were also below the
Zacks Consensus Estimate of $516 million by 1.7%.
Adjusted EBITDA from continuing operations were down 13.3%
from the prior-year quarter to $65 million. This was the result
of the rise in operating costs and decline in EBITDA at the OSB
segment due to lower prices.
Oriental Strand Board:
The OSB segment manufactures and distributes OSB structural panel
Sales in the segment increased 8% year over year to $245
million in the quarter, driven by a 15% increase in volume.
However, the segment's pricing was down 5% year over year due to
slow housing recovery. The segment recorded adjusted EBITDA of
$46 million, down 23.3% from the prior-year quarter, attributable
to lower pricing and higher costs.
Composite Wood Products/Siding:
The Composite Wood Products/Siding segment is engaged in the
production and marketing of siding products and related
accessories, hardboard siding and accessory products, and vinyl
siding products and accessories. These products are used for new
constructions as well as for repair and remodeling. It has three
categories - SmartSide and CanExel siding products and commodity
Sales in the Siding segment improved 11% year over year to
$149 million benefiting from the rise in the pricing as well as
volumes at SmartSide category. With continuous penetration in
retail, repair and remodel markets and sheds, SmartSide volumes
improved 14% year over year. SmartSide average sales prices also
increased 3% year over year.
The segment recorded adjusted EBITDA of $27 million in the
quarter, up 12.2% from the prior-year quarter, driven by higher
sales partially offset by lower OSB pricing.
Engineered Wood Products (EWP):
The EWP segment produces goods used in new constructions like
I-Joist (IJ), Laminated Veneer Lumber (LVL) and Laminated Strand
Engineered Wood Products sales increased 16.1% year over year to
$72 million in the quarter. Volumes of IJ increased 5% year over
year while the same was up 17% for LVL and LSL, benefitting from
higher LSL sales.
Pricing was up 11% in IJ and 3% in LVL and LSL due to price
increases across all product lines offsetting the increased raw
material costs. The segment reported increase in adjusted
The segment manufactures OSB structural panels and siding
products in Chile and Brazil. Segment sales remained flat year
over year at $42 million. Including the changes in foreign
exchange rates, prices increased 5% in Chile but declined 3% in
Brazil. In terms of local currency, however, prices improved 10%
in Chile and 8% in Brazil. The segment's adjusted EBITDA was flat
at $8 million.
The company stated that although the housing industry is
improving, the pace of recovery is much lower than the first half
of 2013 due to the increase in interest/mortgage rates. The
government shut down in early October also took a toll on the
housing market recovery.
However, Louisiana-Pacific continues to be optimistic about
the increase in residential construction spending and overall
price appreciation of the housing market and believes that it
will boost its business in the long term.
The company has posted lower-than-expected results during the
third quarter. Lower OSB pricing, a slower recovery in the
housing market and higher operating costs seems to be responsible
for such disappointing performance.
We believe that the overall economic recession will continue
to affect the company's business, going ahead.
Other Stocks to Consider
Louisiana-Pacific carries a Zacks Rank #4 (Sell). Other stocks
in the sector that are performing well and deserve a mention
Universal Forest Products Inc.
M/I Homes, Inc.
Meritage Homes Corporation
). While Universal Forest holds a Zacks Rank #1 (Strong Buy), M/I
Homes and Meritage Homes carry a Zacks Rank #2 (Buy).
LOUISIANA PAC (LPX): Free Stock Analysis
M/I HOMES INC (MHO): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
UNIVL FST PRODS (UFPI): Free Stock Analysis
To read this article on Zacks.com click here.