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Press release from Business Wire

LP Reports First Quarter 2010 Results

Monday, May 10, 2010

LP Reports First Quarter 2010 Results08:00 EDT Monday, May 10, 2010 NASHVILLE, Tenn. (Business Wire) -- Louisiana-Pacific Corporation (LP) (NYSE: LPX) reported today results for the first quarter ended March 2010, which included the following: Total sales for the first quarter of $297 million were up 44 percent versus a year ago, led by strengthening OSB prices while U.S. housing starts increased 17 percent from first quarter 2009 levels. Losses from continuing operations were $23 million, or $0.18 per diluted share, for the first quarter of 2010. Adjusted EBITDA from continuing operations for the first quarter was $3 million compared to a loss of $25 million in the first quarter of 2009. “2010 started out stronger than expected driven by improved OSB pricing as well as volume growth due to customers replenishing inventories,” said Chief Executive Officer Rick Frost. “All of our operating segments improved over first quarter 2009. We achieved about 80 percent improvement in OSB; 30 percent better results in EWP; and a four fold increase in operating results in Siding.” FIRST QUARTER RESULTS For the quarter ended March 31, 2010, LP reported net sales of $297 million, up from $206 million in the first quarter of 2009. For the first quarter, the company reported a net loss of $23 million as compared to a loss in the first quarter of 2009 of $31 million. For the first quarter of 2010, LP reported a loss from continuing operations of $23 million, or $0.18 per diluted share, as compared to a loss from continuing operations of $30 million, or $0.29 per diluted share, for the first quarter of 2009. ORIENTED STRAND BOARD (OSB) SEGMENT LP's OSB segment manufactures and distributes OSB structural panel products. During the quarter, LP operated eight facilities in the segment. The OSB segment reported net sales for the first quarter of 2010 of $117 million, up 62 percent compared with $72 million of net sales in the first quarter of 2009. For the first quarter of 2010, the OSB segment reported an operating loss of $5 million – an improvement of 81 percent – compared with an operating loss of $24 million in the first quarter of 2009. For the first quarter, LP realized an improvement of $21 million in adjusted EBITDA from continuing operations for this segment as compared to the first quarter of 2009. For the first quarter of 2010 as compared to the first quarter of 2009, sales volumes were up 34 percent with sales price increased by 26 percent. The increase in sales price accounted for an increase of $24 million in both operating results and adjusted EBITDA from continuing operations. Offsetting the favorable increase in sales price was an increase in our Canadian dollar denominated manufacturing costs. The Canadian dollar has strengthened significantly since the first quarter of 2009, which causes our Canadian production costs stated in U.S. dollars to increase. SIDING SEGMENT LP's Siding segment consists of LP SmartSide® siding as well as LP's prefinished LP CanExel® siding line. These products are used in new construction as well as in repair and remodeling markets. Additionally, a small amount of commodity OSB is produced on one of our siding lines. The Siding segment reported net sales of $90 million in the first quarter of 2010, up 20 percent from $75 million in the year-ago first quarter. For the first quarter of 2010, the Siding segment reported an operating income of $9 million compared to operating income of $2 million in the year-ago quarter. For the first quarter, LP reported $14 million in adjusted EBITDA from continuing operations in this segment, an improvement of $7 million as compared to the first quarter of 2009. In the first quarter of 2010, the increase in sales and related profitability was primarily driven by the increased housing market along with the increase in commodity OSB pricing. ENGINEERED WOOD PRODUCTS SEGMENT (EWP) The EWP segment is comprised of I-Joist (IJ), Laminated Veneer Lumber and Laminated Strand Lumber (LVL and LSL). EWP segment sales in the first quarter of 2010 totaled $49 million, up 63 percent from $30 million in the year-ago quarter. Operating losses decreased 28 percent to $7 million for the first quarter of 2010 from $9 million for the first quarter of 2009. For the first quarter of 2010, LP reported a loss of $3 million in adjusted EBITDA from continuing operations in this segment, an improvement of $3 million as compared to the first quarter of 2009. The higher sales in the first quarter were driven by higher volumes due to customers purchasing products to meet demand as well as restock inventories which had been depleted in the prior year. The margin improvement was attributable to reduced costs associated with the mill that produces LSL. COMPANY OUTLOOK “The market for building materials is better than we expected and this strength is continuing into the second quarter,” continued Frost. “It appears that the housing market is recovering, but I also feel that the various government stimulus programs, particularly the homebuyer tax credit, have given homebuilding an extra boost. I expect that we will still experience a bumpy recovery, as foreclosures are likely to rise and the unemployment outlook remains uncertain – both key factors in a housing recovery.” “LP is well positioned to take advantage of the recovery. We have attacked our costs, strengthened our balance sheet and continue to enhance relationships with customers who are also poised to win as the economy recovers,” Frost concluded. ABOUT LP Louisiana-Pacific Corporation (LP) is a leading manufacturer of quality engineered wood building materials including OSB, structural framing products, and exterior siding for use in residential, industrial and light commercial construction. From manufacturing facilities in the U.S., Canada, Chile and Brazil, LP products are sold to builders and homeowners through building materials distributors and dealers and retail home centers. Founded in 1973, LP is headquartered in Nashville, Tennessee and traded on the New York Stock Exchange under LPX. Visit LP's web site at www.lpcorp.com for additional information on the company as well as reconciliation of non-GAAP results. FORWARD LOOKING STATEMENTS This news release contains statements concerning Louisiana-Pacific Corporation's (LP) future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters addressed in these statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, including the level of interest rates and housing starts, market demand for the company's products, and prices for structural products; the availability, cost and other terms of capital; the efficiency and consequences of operations improvement initiatives and cash conservation measures; the effect of forestry, land use, environmental and other governmental regulations; the ability to obtain regulatory approvals; and the risk of losses from fires, floods and other natural disasters. These and other factors that could cause or contribute to actual results differing materially from those contemplated by such forward-looking statements are discussed in greater detail in the company's Securities and Exchange Commission filings.           LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIESFINANCIAL AND QUARTERLY DATA(Dollar amounts in millions, except per share amounts) (Unaudited)     Quarter Ended March 31, 2010   2009   Net sales $ 296.6 $ 205.5   Loss from operations $ (22.7 ) $ (42.5 )   Loss before income taxes and equity in loss of unconsolidated affiliates $ (32.1 ) $ (47.0 )   Loss from continuing operations excluding (gain) loss on sale or impairment of long-lived assets, other operating credits and charges, net, gain (loss) on early debt extinguishment, and other than temporary investment impairment $ (21.7 ) $ (32.4 )   Loss from continuing operations $ (22.5 ) $ (30.3 )   Net loss attributable to LP $ (22.5 ) $ (30.5 )   Net loss per share - basic and diluted $ (0.18 ) $ (0.30 )   Average shares outstanding (in millions) Basic and diluted 125.9 102.8     Calculation of loss from continuing operations excluding (gain) loss on sale or impairment of long-lived assets, impairment of goodwill and other operating credits and charges, net, gain on early debt extinguishment, realized gain on sale of long term investments and other than temporary investment impairment:   Income (loss) from continuing operations   $ (22.5 )   $ (30.3 )   Other than temporary investment impairment - 0.9 Gain on early extinguishment of debt - (0.6 ) (Gain) loss on sale or impairment of long-lived assets 1.3 0.1 Other operating credits and charges, net   (0.1 )   (3.8 ) 1.2 (3.4 ) Provision (benefit) for income taxes on above items   (0.4 )   1.3   0.8 (2.1 )   $ (21.7 ) $ (32.4 )   Per share - basic and diluted $ (0.17 ) $ (0.31 )             CONDENSED CONSOLIDATED STATEMENTS OF INCOMELOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES(Dollar amounts in millions, except per share amounts) (Unaudited)     Quarter Ended March 31, 2010   2009     Net sales $ 296.6   $ 205.5   Operating costs and expenses: Cost of sales 268.0 205.3 Depreciation, amortization and cost of timber harvested 20.4 19.1 Selling and administrative 29.7 27.3 (Gain) loss on sale or impairment of long-lived assets 1.3 0.1 Other operating credits and charges, net   (0.1 )   (3.8 ) Total operating costs and expenses   319.3     248.0     Loss from operations   (22.7 )   (42.5 )   Non-operating income (expense): Foreign currency exchange gain (loss) 1.5 2.6 Gain (loss) on early debt extinguishment - 0.6 Other than temporary investment impairment - (0.9 ) Interest expense, net of capitalized interest (16.8 ) (12.9 ) Investment income   5.9     6.1   Total non-operating income (expense)   (9.4 )   (4.5 )   Loss before taxes and equity in loss of unconsolidated affiliates (32.1 ) (47.0 ) Benefit for income taxes (10.3 ) (19.3 ) Equity in loss of unconsolidated affiliates   0.7     2.6     Loss from continuing operations   (22.5 )   (30.3 )   Discontinued operations: Loss from discontinued operations before income taxes (0.3 ) (0.7 ) Income tax benefit   (0.1 )   (0.3 ) Loss from discontinued operations   (0.2 )   (0.4 )   Net loss (22.7 ) (30.7 )   Less: Net loss attributed to noncontrolling interest   (0.2 )   (0.2 )   Net loss attributed to Louisiana-Pacific Corporation $ (22.5 ) $ (30.5 )   Loss per share of common stock (basic and diluted): Loss from continuing operations $ (0.18 ) $ (0.29 ) Loss from discontinued operations   -     (0.01 ) Net loss per share $ (0.18 ) $ (0.30 )   Average shares of stock outstanding - basic and diluted   125.9     102.8     Amounts attributed to LP Corporation - common shareholders Loss from continuing operations, net of tax $ (22.3 ) $ (30.1 ) Loss from discontinued operations, net of tax   (0.2 )   (0.4 ) $ (22.5 ) $ (30.5 )             CONDENSED CONSOLIDATED BALANCE SHEETSLOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES(Dollar amounts in millions) (Unaudited)         March 31, 2010   December 31, 2009 ASSETS Cash and cash equivalents $ 357.4 $ 394.1 Receivables, net 95.8 59.9 Income tax receivable 5.7 52.7 Inventories 183.4 140.4 Prepaid expenses and other current assets 2.2 6.2 Deferred income taxes 1.4 1.4 Current portion of notes receivable from asset sales 115.1 115.1 Assets held for sale   68.0     69.1   Total current assets 829.0 838.9   Timber and timberlands 50.1 50.6   Property, plant and equipment 2,077.4 2,081.1 Accumulated depreciation   (1,134.0 )   (1,116.6 ) Net property, plant and equipment 943.4 964.5   Notes receivable from asset sales 533.5 533.5 Long-term investments 36.4 26.3 Restricted cash 20.9 20.8 Investments in and advances to affiliates 135.1 133.7 Deferred debt costs 12.3 13.2 Other assets 27.3 26.6 Long term deferred tax asset   7.4     7.4   Total assets $ 2,595.4   $ 2,615.5     LIABILITIES AND EQUITY Current portion of long-term debt $ 60.3 $ 60.3 Current portion of limited recourse notes payable 113.4 113.4 Short-term notes payable 0.4 0.4 Accounts payable and accrued liabilities 125.1 123.0 Current portion of contingency reserves   10.0     10.0   Total current liabilities 309.2 307.1   Long-term debt, excluding current portion: Limited recourse notes payable 119.9 119.9 Other long-term debt   586.3     586.4   Total long-term debt, excluding current portion 706.2 706.3   Contingency reserves, excluding current portion 28.5 30.8 Other long-term liabilities 137.1 137.2 Deferred income taxes 160.1 164.3   Redeemable noncontrolling interest 20.5 21.1   Stockholders' equity: Common stock 139.7 139.7 Additional paid-in capital 559.9 562.4 Retained earnings 874.8 897.3 Treasury stock (280.6 ) (286.1 ) Accumulated comprehensive loss   (60.0 )   (64.6 ) Total stockholders' equity   1,233.8     1,248.7   Total liabilities and equity $ 2,595.4   $ 2,615.5               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSLOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES(Dollar amounts in millions)  (Unaudited)     Quarter Ended March 31, 2010   2009   CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (22.7 ) $ (30.7 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, amortization and cost of timber harvested 20.4 19.1 Loss from unconsolidated affiliates 0.7 2.6 (Gain) loss on sale or impairment of long-lived assets 1.3 0.1 Other operating credits and charges, net (0.1 ) 0.7 Exchange gain (loss) on remeasurement 0.5 (5.4 ) Stock based compensation expense related to stock plans 3.2 1.8 Cash settlement of contingencies (2.4 ) (5.0 ) Pension payments, net of expense 2.0 1.6 Other than temporary impairment on investments - 0.9 Other adjustments, net 1.9 (1.0 ) Increase in receivables (36.4 ) (34.3 ) Decrease in income tax receivable 47.1 70.6 (Increase) decrease in inventories (43.6 ) 1.2 Decrease in prepaid expenses 4.2 5.9 Increase (decrease) in accounts payable and accrued liabilities 1.0 (3.7 ) Decrease in deferred income taxes   (9.2 )   (22.1 ) Net cash provided by (used in) operating activities   (32.1 )   2.3     CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions (1.9 ) (3.9 ) Investments and advances to joint ventures (2.1 ) (3.7 ) Proceeds from sale of investments - 19.6 (Increase) decrease in restricted cash under letters of credit/credit facility requirements (0.1 ) 26.8 Other investing activities, net   0.4     0.5   Net cash provided by (used in) investing activities   (3.7 )   39.3     CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings of long-term debt - 281.3 Repayment of long-term debt - (126.6 ) Payment of debt issuance fees   -     (14.5 ) Net cash provided by (used in) financing activities   -     140.2     EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS:   (0.9 )   0.4     Net increase (decrease) in cash and cash equivalents (36.7 ) 182.2 Cash and cash equivalents at beginning of period   394.1     97.7     Cash and cash equivalents at end of period $ 357.4   $ 279.9               LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIESSELECTED SEGMENT INFORMATION(Dollar amounts in millions) (Unaudited)     Dollar amounts in millions   Quarter Ended March 31,   2010   2009   Net sales: OSB $ 117.0 $ 72.3 Siding 89.6 74.7 Engineered Wood Products 48.8 30.0 Other   41.2     28.5   $ 296.6   $ 205.5     Operating profit (loss): OSB $ (4.5 ) $ (24.2 ) Siding 8.5 2.1 Engineered Wood Products (6.6 ) (9.2 ) Other 0.2 1.6 Other operating credits and charges, net 0.1 3.8 Gain (loss) on sales of and impairment of long-lived assets (1.3 ) (0.1 ) General corporate and other expenses, net (19.8 ) (19.1 ) Foreign currency gain (losses) 1.5 2.6 Loss on early debt extinguishment - 0.6 Other than temporary investment impairment - (0.9 ) Investment income 5.9 6.1 Interest expense, net of capitalized interest   (16.8 )   (12.9 ) Loss from operations before taxes (32.8 ) (49.6 ) Benefit for income taxes   (10.3 )   (19.3 ) Loss from continuing operations $ (22.5 )   $ (30.3 )             LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIESSUMMARY OF PRODUCTION VOLUMES     Quarter Ended March 31, 2010   2009   Oriented strand board, million square feet 3/8" basis(1) 664 421   Oriented strand board, million square feet 3/8" basis (produced by wood-based siding mills) 49 50   Wood-based siding, million square feet 3/8" basis 204 161   Engineered I-Joist, million lineal feet(1) 22 9   Laminated veneer lumber (LVL), thousand cubic feet(1) 662 441   Laminated strand lumber (LSL), thousand cubic feet 237 176           (1) Includes volumes produced by joint venture operations or under sales arrangements and sold to LP.