It has been about a month since the last earnings report for Louisiana-Pacific (LPX Quick QuoteLPX - Free Report) . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Louisiana-Pacific due for a breakout? 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 Q2 Earnings & Net Sales Beat, Up Y/Y

Louisiana-Pacific or LP, reported stellar second-quarter 2024 results. Earnings and net sales beat the respective Zacks Consensus Estimate and increased on a year-over-year basis.

Several key factors propelled the impressive quarterly performance. 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 underscored the robust market appetite. Moreover, higher commodity prices, enhanced operational efficiency and a decline in freight, raw materials and labor costs were pivotal in driving margin expansion.

Given the solid demand trend, the company increased its Siding net sales year-over-year growth range.

Detailed Discussion

Louisiana-Pacific reported adjusted earnings per share (EPS) of $2.09, which beat the Zacks Consensus Estimate of $1.86 by 12.4%. The bottom line increased a whopping 280% from the year-ago quarter’s figure of 55 cents on the back of strong adjusted EBITDA.

Net sales of $814 million topped the consensus estimate of $802 million by 1.5% and grew 33% from the prior-year figure, owing to solid Siding and OSB sales.

Adjusted EBITDA of $229 million was up 146.2% from the prior-year quarter’s level, backed by higher OSB selling prices and decreases in inflationary costs (including freight, raw materials and labor).

Segmental Analysis

Siding: The segment’s sales of $415 million were up 30% from the prior-year period. A 6% rise in the average net selling price (ASP) and a 22% increase in volume from the prior-year level led to the improvement. Adjusted EBITDA was $105 million, a 78% increase from $59 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 53% year over year to $351 million, owing to a rise in OSB prices of 34% and 38% in structural solutions and commodities, respectively. Also, 10% higher shipments in OSB-Structural Solutions and 17% in OSB-Commodity led to the increase. The segment’s adjusted EBITDA surged 239% year over year to $125 million, driven by higher OSB prices and sales volumes, partially offset by increased mill-related costs.

LP South America (LPSA): Sales of $46 million decreased 12% due to 16% lower ASPs in OSB-Structural Solutions and 15% in Siding. Adjusted EBITDA plunged 17% from the year-ago quarter to $10 million due to unfavorable currency fluctuations, partially offset by local currency revenues.

Financials

At the second quarter-end, Louisiana-Pacific had $867 million in liquidity. As of Jun 30, 2024, cash and cash equivalents were $317 million compared with $222 million in 2023-end. Long-term debt was $347 million, in line with the 2023-end level. At the end of the first six months of 2024, net cash provided by operations was $317 million against $30 million of cash used in operating activities a year ago.

During the second quarter, LPX repurchased 1.2 million of its common shares for a total of $102 million. This left 71 million common shares outstanding at the end of Jun 30. Consequently, the company paid an additional $64 million for repurchasing 0.7 million common shares after the quarter end and as of Aug 6. About $271 million remains under the pre-existing share repurchase authorizations.

Q3 Outlook

For the third quarter, the company expects Siding Solutions’ revenues to grow in the band of 16-18% from the year-ago period. It anticipates consolidated adjusted EBITDA in the range of $105-$125 million, of which, $95-$105 million is likely to be contributed by Siding and $10-$20 million is anticipated to be added by OSB.

2024 Guidance Revised

The company now expects Siding Solutions’ revenues to rise year over year between 14% and 16%, up from the prior expected range of 11-13%.

LPX now projects consolidated adjusted EBITDA in the range of $580-$620 million compared with the prior projection of $655-$685 million. Of the guided range, $355-$375 million is likely to be contributed by Siding and $225-$245 million is likely to be added by OSB. Siding adjusted EBITDA was previously expected to be between $340 million and $360 million while OSB was expected between $315 million and $325 million.

LPX still anticipates capital expenditures between $200 million and $220 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

The consensus estimate has shifted -5.91% due to these changes.

VGM Scores

Currently, Louisiana-Pacific has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Louisiana-Pacific has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.