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Why Is Louisiana-Pacific (LPX) Up 7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have added about 7% 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 its most recent earnings report in order to get a better handle on the important drivers.
Louisiana-Pacific Q1 Earnings & Sales Beat, Guidance Up
Louisiana-Pacific Corporation or LP, reported impressive first-quarter 2024 results. Earnings and net sales beat their respective Zacks Consensus Estimate and increased on a year-over-year basis.
The impressive first-quarter 2024 performance was primarily propelled by several key factors. Notably, there was a notable surge in demand for Siding and OSB, highlighted by a significant increase in volume. Record-breaking volumes for ExpertFinish and BuilderSeries were achieved, underscoring the robust market appetite. Moreover, higher commodity prices and enhanced operational efficiency played pivotal roles in driving margin expansion during this period.
Despite lingering macroeconomic uncertainties, the steadfast demand for SmartSide and Structural Solutions has persisted into the second quarter, further bolstering the positive outlook. Consequently, LP is confidently revising its projections upward for both the second quarter and the entire fiscal year, reflecting the substantial momentum derived from these driving forces.
Detailed Discussion
Louisiana-Pacific reported adjusted earnings per share (EPS) of $1.53, beating the Zacks Consensus Estimate of $1.13 by 35.4%. The bottom line increased 350% from the year-ago quarter’s reported figure of 34 cents on the back of strong adjusted EBITDA.
Net sales of $724 beat the consensus estimate of $677 million by 7% and grew 24% from the prior-year figure, owing to solid Siding and OSB sales.
Adjusted EBITDA of $182 million was up 175.8% from the prior-year quarter’s level, backed by higher OSB selling prices and a decrease in inflationary costs (including freight, raw materials, and labor).
Segmental Analysis
Siding: The segment’s sales of $361 million were up 9% from the prior-year period. A 5% rise in the average net selling price (ASP) and a 4% increase in volume from prior-year levels led to the improvement. Adjusted EBITDA came in at $90 million, a 34% increase from $67 million reported a year ago. The growth was attributable to higher net sales accompanied by a decrease in costs, including freight, raw materials, and labor. These were partially offset by an increase in mill overhead.
OSB: Sales in the segment increased 65% year over year to $313 million, owing to a rise in OSB prices of 24% and 49% in structural solutions and commodities, respectively. Also, higher shipments in OSB-Structural Solutions by 36% and OSB-Commodity by 9% led to the growth. The company’s adjusted EBITDA grew a whopping 1,829% year over year to $90 million, given higher OSB prices and sales volumes, partially offset by higher mill-related costs.
LP South America (LPSA): Sales of $47 million decreased 15% due to lower ASPs in OSB-Structural Solutions by 19% and Siding by 14% in the first quarter. Adjusted EBITDA plunged 19% from the year-ago quarter to $10 million due to lower ASPs and unfavorable currency fluctuations, partially offset by lower raw material costs.
Financials
At the first quarter of 2024-end, LP had $800 million in liquidity. As of Mar 31, 2024, Louisiana-Pacific had cash and cash equivalents of $244 million compared with $222 million at 2023-end. Long-term debt was $347 million, which aligned with the 2023-end level. In the first quarter, net cash provided by operations was $105 million versus $119 million of cash used in operating activities reported a year ago.
In the year-to-date period that ended May 8, 2024, LP has allocated $50 million toward repurchasing 0.6 million common shares. Within this timeframe, $13 million was utilized for repurchases during the three months that ended Mar 31, 2024. Consequently, $150 million remains available under the pre-existing share repurchase program authorized in May 2022. Additionally, there has been an authorization of an additional $250 million for the repurchase of LP common stock, thereby increasing the total authorized amount for stock repurchases to $400 million as of May 8, 2024.
Q2 & 2024 Guidance
For the second quarter of 2024, the company expects Siding Solutions’ revenues to grow 20-25% from the year-ago period. It anticipates a consolidated adjusted EBITDA of $220-$240 million, of this, $95-$105 million is likely to be contributed by Siding, and $125-$135 million is likely to be added by OSB.
For 2024, the company now expects Siding Solutions’ revenues to rise 11-13% from 2023 versus an earlier projection of 8-10%. LP now projects a consolidated adjusted EBITDA of $655-$685 million, of this, $340-$360 million is likely to be contributed by Siding, and $315-$325 million is likely to be added by OSB. Earlier, LP had expected a consolidated adjusted EBITDA of $495-$525 million, of this, $280-$300 million was from Siding, and $215-$225 million from OSB.
LP still anticipates capital expenditures between $200 million and $220 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 53.79% due to these changes.
VGM Scores
At this time, Louisiana-Pacific has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 is part of the Zacks Building Products - Wood industry. Over the past month, Rayonier (RYN - Free Report) , a stock from the same industry, has gained 3.1%. The company reported its results for the quarter ended March 2024 more than a month ago.
Rayonier reported revenues of $168.1 million in the last reported quarter, representing a year-over-year change of -6.1%. EPS of $0.05 for the same period compares with $0.01 a year ago.
For the current quarter, Rayonier is expected to post earnings of $0.14 per share, indicating a change of +180% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.5% over the last 30 days.
Rayonier has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Louisiana-Pacific (LPX) Up 7% Since Last Earnings Report?
A month has gone by since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have added about 7% 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 its most recent earnings report in order to get a better handle on the important drivers.
Louisiana-Pacific Q1 Earnings & Sales Beat, Guidance Up
Louisiana-Pacific Corporation or LP, reported impressive first-quarter 2024 results. Earnings and net sales beat their respective Zacks Consensus Estimate and increased on a year-over-year basis.
The impressive first-quarter 2024 performance was primarily propelled by several key factors. Notably, there was a notable surge in demand for Siding and OSB, highlighted by a significant increase in volume. Record-breaking volumes for ExpertFinish and BuilderSeries were achieved, underscoring the robust market appetite. Moreover, higher commodity prices and enhanced operational efficiency played pivotal roles in driving margin expansion during this period.
Despite lingering macroeconomic uncertainties, the steadfast demand for SmartSide and Structural Solutions has persisted into the second quarter, further bolstering the positive outlook. Consequently, LP is confidently revising its projections upward for both the second quarter and the entire fiscal year, reflecting the substantial momentum derived from these driving forces.
Detailed Discussion
Louisiana-Pacific reported adjusted earnings per share (EPS) of $1.53, beating the Zacks Consensus Estimate of $1.13 by 35.4%. The bottom line increased 350% from the year-ago quarter’s reported figure of 34 cents on the back of strong adjusted EBITDA.
Net sales of $724 beat the consensus estimate of $677 million by 7% and grew 24% from the prior-year figure, owing to solid Siding and OSB sales.
Adjusted EBITDA of $182 million was up 175.8% from the prior-year quarter’s level, backed by higher OSB selling prices and a decrease in inflationary costs (including freight, raw materials, and labor).
Segmental Analysis
Siding: The segment’s sales of $361 million were up 9% from the prior-year period. A 5% rise in the average net selling price (ASP) and a 4% increase in volume from prior-year levels led to the improvement. Adjusted EBITDA came in at $90 million, a 34% increase from $67 million reported a year ago. The growth was attributable to higher net sales accompanied by a decrease in costs, including freight, raw materials, and labor. These were partially offset by an increase in mill overhead.
OSB: Sales in the segment increased 65% year over year to $313 million, owing to a rise in OSB prices of 24% and 49% in structural solutions and commodities, respectively. Also, higher shipments in OSB-Structural Solutions by 36% and OSB-Commodity by 9% led to the growth. The company’s adjusted EBITDA grew a whopping 1,829% year over year to $90 million, given higher OSB prices and sales volumes, partially offset by higher mill-related costs.
LP South America (LPSA): Sales of $47 million decreased 15% due to lower ASPs in OSB-Structural Solutions by 19% and Siding by 14% in the first quarter. Adjusted EBITDA plunged 19% from the year-ago quarter to $10 million due to lower ASPs and unfavorable currency fluctuations, partially offset by lower raw material costs.
Financials
At the first quarter of 2024-end, LP had $800 million in liquidity. As of Mar 31, 2024, Louisiana-Pacific had cash and cash equivalents of $244 million compared with $222 million at 2023-end. Long-term debt was $347 million, which aligned with the 2023-end level. In the first quarter, net cash provided by operations was $105 million versus $119 million of cash used in operating activities reported a year ago.
In the year-to-date period that ended May 8, 2024, LP has allocated $50 million toward repurchasing 0.6 million common shares. Within this timeframe, $13 million was utilized for repurchases during the three months that ended Mar 31, 2024. Consequently, $150 million remains available under the pre-existing share repurchase program authorized in May 2022. Additionally, there has been an authorization of an additional $250 million for the repurchase of LP common stock, thereby increasing the total authorized amount for stock repurchases to $400 million as of May 8, 2024.
Q2 & 2024 Guidance
For the second quarter of 2024, the company expects Siding Solutions’ revenues to grow 20-25% from the year-ago period. It anticipates a consolidated adjusted EBITDA of $220-$240 million, of this, $95-$105 million is likely to be contributed by Siding, and $125-$135 million is likely to be added by OSB.
For 2024, the company now expects Siding Solutions’ revenues to rise 11-13% from 2023 versus an earlier projection of 8-10%. LP now projects a consolidated adjusted EBITDA of $655-$685 million, of this, $340-$360 million is likely to be contributed by Siding, and $315-$325 million is likely to be added by OSB. Earlier, LP had expected a consolidated adjusted EBITDA of $495-$525 million, of this, $280-$300 million was from Siding, and $215-$225 million from OSB.
LP still anticipates capital expenditures between $200 million and $220 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 53.79% due to these changes.
VGM Scores
At this time, Louisiana-Pacific has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 is part of the Zacks Building Products - Wood industry. Over the past month, Rayonier (RYN - Free Report) , a stock from the same industry, has gained 3.1%. The company reported its results for the quarter ended March 2024 more than a month ago.
Rayonier reported revenues of $168.1 million in the last reported quarter, representing a year-over-year change of -6.1%. EPS of $0.05 for the same period compares with $0.01 a year ago.
For the current quarter, Rayonier is expected to post earnings of $0.14 per share, indicating a change of +180% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.5% over the last 30 days.
Rayonier has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.