Q4 2011 Earnings Call
February 07, 2012 11:00 am ET
Richard W. Frost - Chief Executive Officer, Director, Member of Executive Committee and Member of Environmental & Compliance Committee
Sallie B. Bailey - Chief Financial Officer and Executive Vice President
Curtis M. Stevens - Chief Operating Officer and Executive Vice President
Richard S. Olszewski - Executive Vice President of Speciality Products & Sales and Marketing
George L. Staphos - BofA Merrill Lynch, Research Division
Gail S. Glazerman - UBS Investment Bank, Research Division
Chip A. Dillon - Vertical Research Partners Inc.
Mark A. Weintraub - Buckingham Research Group, Inc.
Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division
Paul C. Quinn - RBC Capital Markets, LLC, Research Division
Steven Chercover - D.A. Davidson & Co., Research Division
Mark Wilde - Deutsche Bank AG, Research Division
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Richard W. Frost
Good morning, everyone, and congratulations to all the Giants fans. Welcome to LP's fourth quarter 2011 earnings call. I am Rick Frost, the CEO of LP Building Products. And this morning, I am joined by our new CFO, Sallie Bailey, who is participating for the first time in LP's reporting process, and Sallie joined the company the second week of December. Also in the room this morning are Curt Stevens, our recently appointed Chief Operating Officer who is here to back Sallie up since she wasn't on board for most of the quarter; and Mike Kinney, who, along with Becky Barckley, handles our Investor Relations. I've also asked Rick Olszewski, our EVP of Sales and Marketing Specialties in South America to sit in. Since this is the first time that we have broken out South America into a reporting segment, I thought I'd have Rick be on hand to field any questions that you may have on South America.
So now I'll turn it over to Sallie Bailey to discuss the fourth quarter and the full year of 2011, and then I will come back on and offer some color on the quarter and a few thoughts about how 2012 is looking and feeling this early in the year. Sallie, welcome.
Sallie B. Bailey
Thank you, Rick. I'll begin with a review of the financial results for the fourth quarter and the full year 2011. This will be followed by some comments on the performance of the individual segments and selected balance sheet items.
As we have done in the past, we have opened up to the public and we're doing the webcast. The webcast can be accessed at www.lpcorp.com. Additionally, to help with the discussion, we have provided a presentation with supplemental information that should be reviewed in conjunction with the earnings release. I will be referencing these slides in my comments. We have also filed an 8-K this morning with some supplemental information. We will file our annual Form 10-K at the end of the month.
I want to remind all the participants about the forward-looking statements comment on Slide 2 of the presentation. Please also be aware of the discussion of our use of non-GAAP financial information included on Slide 3 of the presentation. The appendix attached to the presentation has some necessary reconciliations that have been supplemented by the Form 8-K filing we made this morning. Rather than reading these 2 statements, I incorporate them with this reference.
Before I get started on the detailed discussion of LP's financial results for the fourth quarter and full year, I want to make some higher level comments and observations. Total housing starts increased in the fourth quarter so that the full year eked out a slight gain compared to last year. However, for the important single-family portion of starts, they were down 9% compared to last year, the lowest since these statistics have been collected over 60 years ago.
Our operating results for the fourth quarter after adjusting for non-cash impairment charge at our U.S. GreenFiber cellulose insulation joint venture were relatively unchanged from last quarter. There was quite a bit of movement in the effective tax rates for the various quarters and the full years. This makes the comparability of a net loss more difficult, and I will provide some clarification in my upcoming comments.
For the first time, we are reporting our South American operations as a separate segment and I think you should be pleased with the results. We ended the year with a strong balance sheet and have a bit of a tailwind behind us as housing activity is showing some signs of life. With that, let me go into the details.
Please refer to Slide 4 of the presentation for a discussion of the fourth quarter 2011 results compared to the third quarter of 2011 and the fourth quarter of 2010. In the fourth quarter of 2011, we recorded a net loss of $47 million or $0.34 per diluted share. Net sales from continuing operations were $312 million for the quarter. For the fourth quarter of 2010, we reported a net loss of $7 million or $0.05 per diluted share and sales from continuing operations of $316 million.
The adjusted loss from continuing operations for the quarter is $46 million or $0.33 per share compared to $15.5 million or $0.12 per share in the fourth quarter of 2010. The change in the adjusted loss primarily relates to recording lower investment income in the fourth quarter of 2011.