Louisiana-Pacific Corporation (LPX) | Investment Case

1. Company Snapshot

1.a. Company Description

Louisiana-Pacific Corporation, together with its subsidiaries, manufactures and markets building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets.It operates through four segments: Siding; Oriented Strand Board (OSB); Engineered Wood Products (EWP); and South America.The Siding segment offers LP SmartSide trim and siding products, LP SmartSide ExpertFinish trim and siding products, LP BuilderSeries lap siding products, and LP Outdoor Building Solutions; and engineered wood siding, trim, soffit, and fascia products.

The OSB segment manufactures and distributes OSB structural panel products comprising LP TechShield radiant barriers, LP WeatherLogic air and water barriers, LP Legacy premium sub-flooring products, LP FlameBlock fire-rated sheathing products, and LP TopNotch sub-flooring products.The EWP segment provides laminated veneer lumber and other related products; and LP SolidStart I-joists, which are primarily used in residential and commercial floorings, roofing systems, and other structural applications.The South America segment manufactures and distributes OSB structural panel and siding products.

This segment also distributes and sells related products for the region's transition to wood frame construction.It also offers timber and timberlands and other products and services.The company sells its products primarily to retailers, wholesalers, and homebuilding and industrial businesses in North America and South America, Asia, Australia, and Europe.

Louisiana-Pacific Corporation was incorporated in 1972 and is headquartered in Nashville, Tennessee.

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1.b. Last Insights on LPX

Louisiana-Pacific Corporation's recent performance was negatively impacted by its Q3 earnings miss, with quarterly earnings of $0.36 per share, falling short of the Zacks Consensus Estimate of $0.37 per share. This compares to earnings of $1.22 per share a year ago. Additionally, the Teacher Retirement System of Texas reduced its position in the company's shares by 18.4%. The company's quarterly dividend of $0.28 per share, announced on October 30, provides some stability for shareholders.

1.c. Company Highlights

Last Price	84.21
Change Percentage	2.46%
Open	82.3
Previous Close	82.19
Market Cap ( Millions)	5865
Volume	780382
Year High	121.61
Year Low	73.42
M A 50	84.8
M A 200	89.85

FCF Yield	2.42%
Dividend Yield	1.33%
ROE	13.73%
Debt / Equity	21.28%
Net Debt / EBIDTA	13.37%
Price To Book	3.39
Price Earnings Ratio	25.08
Price To FCF	41.3
Price To sales	2.08
EV / EBITDA	14.65

2. Earnings Report Analysis: Mixed Performance and Future Outlook

The company's financial performance in the third quarter was mixed, with total sales down 8% compared to the prior year, resulting in an EBITDA of $82 million, also down significantly due to the extended trough in OSB prices. The EPS came in at $0.36, slightly below estimates of $0.37. The Siding segment, however, showed resilience with a 5% growth in sales revenue, driven primarily by price and a strong mix, exceeding expectations and guidance. As Alan J. Haughie noted, "ExpertFinish volumes were up 17% year-over-year, driven by demand for LP's 2-tone naturals and other higher-priced prefinished products."

Publication Date: Nov -10

                                    📋 Highlights
                                    Siding Revenue Growth::
                                                5% increase driven by price and mix, despite flat volume (expert analysis).
ExpertFinish Expansion::
                                                17% YoY volume growth due to demand for 2-tone naturals and premium prefinished products.
OSB Performance Challenges::
                                                Total sales down 8% YoY; EBITDA fell to $82M amid OSB price troughs, but OEE improved to 80%.
Leadership Transition::
                                                Brad Southern retiring in February; Jason Ringblom appointed as new CEO after 25+ years of service.
EBITDA Guidance Reaffirmed::
                                                Full-year EBITDA of $430M; Q4 revenue guided to ~$370M with softer Siding growth expected.

                                

Segment Performance

The OSB business achieved 80% overall equipment effectiveness, up 2 points from last year, indicating operational efficiency. However, the demand for OSB has been soft, prompting a focus on matching capacity to demand. The company's utilization rate for OSB is in the high 60s, aligning with committed volumes. The Siding segment is expected to continue growing, with a focus on price and a strong mix, although slightly softer growth is anticipated in the fourth quarter.

Future Outlook and Guidance

The company reaffirmed its full-year EBITDA guidance of $430 million and guided to fourth-quarter revenue of about $370 million and EBITDA of about $82 million. Jason Ringblom mentioned that they have multiple options for expanding Siding capacity, including expanding existing plants, converting OSB facilities, and building a new greenfield, with the decision to be based on timing and capital efficiency. The company's near-term outlook for OSB is challenging, but they believe in the business's long-term potential.

Valuation Metrics

With a P/E Ratio of 23.38, P/B Ratio of 3.16, and EV/EBITDA of 13.67, the market seems to be pricing in a certain level of growth and profitability. Analysts estimate next year's revenue growth at 6.4%, which is slightly above the current P/S Ratio of 1.94, indicating a reasonable valuation. The company's ROIC of 9.93% and ROE of 13.73% suggest a decent return on capital and equity, respectively.

Strategic Initiatives

The company is exploring strategic initiatives, including bundling OSB and Siding products, with some progress made in the big builder segment. They are also focusing on improving their share position in the Siding portfolio through segment strategies for new construction, repair, remodel, and off-site. The ExpertFinish line has shown improvement, with a strong value proposition and demand for the naturals collection launched in April.

3. NewsRoom

LP® SmartSide® ExpertFinish® Naturals Collection™ Siding Portfolio Earns Innovation Award From BUILDINGS Magazine

Dec -03

Source: businesswire.com

Ceredex Value Advisors LLC Grows Position in Louisiana-Pacific Corporation $LPX

Nov -29

Source: defenseworld.net

Louisiana-Pacific Corporation $LPX Shares Bought by American Century Companies Inc.

Nov -29

Source: defenseworld.net

Rep. Lisa C. McClain Sells Louisiana-Pacific Corporation (NYSE:LPX) Stock

Nov -27

Source: defenseworld.net

LP Building Solutions Unveils 2026 Color of the Year: Sand Dunes

Nov -17

Source: businesswire.com

Campbell & CO Investment Adviser LLC Sells 2,709 Shares of Louisiana-Pacific Corporation $LPX

Nov -17

Source: defenseworld.net

Louisiana-Pacific: A Tale Of 2 Markets

Nov -17

Source: seekingalpha.com

Envestnet Asset Management Inc. Trims Position in Louisiana-Pacific Corporation $LPX

Nov -16

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.59%)

6. Segments

Siding

Expected Growth: 4.5%

LP's siding segment growth is driven by increasing demand for durable and low-maintenance exterior products, favorable housing market trends, and market share gains from competitors. Additionally, LP's focus on innovative products, such as its SmartSide trim and siding, and strategic partnerships with builders and contractors contribute to its growth.

Oriented Strand Board

Expected Growth: 4.8%

The 4.8% growth of Oriented Strand Board (OSB) from Louisiana-Pacific Corporation is driven by increasing demand for affordable and sustainable building materials, rising new home construction and remodeling activities, and growing adoption in industrial and commercial applications. Additionally, LP's strategic investments in capacity expansion, product innovation, and operational efficiency have contributed to the segment's growth.

Louisiana-Pacific South America

Expected Growth: 4.2%

Louisiana-Pacific South America's 4.2% growth is driven by increasing demand for oriented strand board (OSB) and engineered wood products in the region, fueled by infrastructure development, housing growth, and government-backed construction projects. Additionally, the company's strategic expansion into new markets, such as Chile and Colombia, and its focus on operational efficiency and cost reduction also contribute to its growth.

Other

Expected Growth: 4.0%

Louisiana-Pacific Corporation's 4.0% growth in the 'Other' segment is driven by increasing demand for engineered wood products, particularly in the repair and remodel market. Additionally, the company's strategic investments in capacity expansion and operational efficiency have improved productivity, leading to higher sales volumes and revenue growth.

7. Detailed Products

Oriented Strand Board (OSB)

A type of engineered wood made from strands of wood pressed together with adhesives, used for flooring, walls, and roofing.

Siding

Exterior cladding products designed to protect and beautify homes, including lap, panel, and board products.

Engineered Wood Products (EWP)

A range of products, including I-joists, laminated veneer lumber (LVL), and rim board, used in floor and roof construction.

Roofing

A range of roofing products, including OSB, plywood, and specialty roofing products.

South America Products

A range of products, including OSB, plywood, and MDF, designed for the South American market.

8. Louisiana-Pacific Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Louisiana-Pacific Corporation is moderate due to the availability of alternative building materials such as steel and concrete.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the construction industry, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of a few large suppliers of raw materials, giving them some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and regulatory barriers to entry in the building materials industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the industry, leading to intense competition for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	19.53%
Debt Cost	4.90%
Equity Weight	80.47%
Equity Cost	13.31%
WACC	11.67%
Leverage	24.28%

11. Quality Control: Louisiana-Pacific Corporation passed 7 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Beacon Roofing Supply

A-Score: 5.0/10

Value: 5.6

Growth: 7.3

Quality: 3.3

Yield: 0.0

Momentum: 8.0

Volatility: 6.0

1-Year Total Return ->

A-Score: 4.8/10

Value: 3.8

Growth: 7.0

Quality: 6.6

Yield: 2.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

Fortune Brands

A-Score: 4.2/10

Value: 5.1

Growth: 4.6

Quality: 5.1

Yield: 3.0

Momentum: 1.0

Volatility: 6.3

1-Year Total Return ->

Advanced Drainage Systems

A-Score: 4.1/10

Value: 2.7

Growth: 6.7

Quality: 6.6

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

1-Year Total Return ->

Trex

A-Score: 4.0/10

Value: 3.9

Growth: 5.8

Quality: 6.7

Yield: 0.0

Momentum: 2.5

Volatility: 5.0

1-Year Total Return ->

AAON

A-Score: 3.7/10

Value: 2.2

Growth: 8.1

Quality: 5.8

Yield: 0.0

Momentum: 3.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

11.86%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

11.67%

Louisiana-Pacific Corporation - US5463471053

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on LPX

1.c. Company Highlights

Average Quality

Fairly Valued

Stable Momentum

Earnings Beats

Revenues Beats

Better Quality

Higher Growth

Strong Momentum

Revenues Miss

Average Growth

Medium Volatility

Earnings Miss

2. Earnings Report Analysis: Mixed Performance and Future Outlook

Segment Performance

Future Outlook and Guidance

Valuation Metrics

Strategic Initiatives

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.59%)

6. Segments

Siding

Expected Growth: 4.5%

Oriented Strand Board

Expected Growth: 4.8%

Louisiana-Pacific South America

Expected Growth: 4.2%

Other

Expected Growth: 4.0%

7. Detailed Products

Oriented Strand Board (OSB)

Siding

Engineered Wood Products (EWP)

Roofing

South America Products

8. Louisiana-Pacific Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Louisiana-Pacific Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

84.21$

Current Price

84.21$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA