Louisiana-pacific Corporation · NYSE:LPX
Louisiana-pacific — Goldman Sachs Basic Materials Conference 2006
28 slides from Louisiana-pacific's conference presentation, May 25, 2006
Slide 1: Louisiana-Pacific Corporation Investor Presentation
Louisiana - Pacific Corporation Investor Presentation Goldman Sachs Basic Materials Conference May 25, 2006
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation 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 accuracy of such statements is subject
Slide 3: Market Outlook – Demand
Market Outlook – Demand • New construction housing demand: – Positive long term trends and demographics including: household formations, immigration, low interest rates – Sustainable at 1.85 – 1.95 million starts per year (2005-2015) Source: The State of the Nation’s Housing – 2004, Joint Center for
Slide 4: Home Building Demand
Home Building Demand Housing Starts (single and multi-family) JCH 3.0 Actual 1995 - 2004 Demand Average New Housing Starts (mm) 2.5 Rolling 5 year Average 2.0 1.5 1.0 Forecast 0.5 0.0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Sources: US Department of Commerce; RISI April 2006, 5 year f
Slide 5: LP Channel Strategy: Supplier of Choice
LP Channel Strategy: Supplier of Choice by Getting Customers to Have a Preference for LP Products 5 Strategic Goals Marketing & Selling 1. 1. Get Get the the larger larger builders builders to want our products to want our products Builders/ Builders/ Distributors Distributors Pro Pro Dealers Dealer
Slide 6: LP's Business Segments
LP’s Business Segments OSB OSB Siding Siding Commodity SmartSide OSB Siding Panels Exterior Hardboard Tech Shield Siding Flooring Engineered Wood Other OtherBuilding Building Products Products Products Laminated Composite Decking Veneer Lumber Moulding I - Joist Chile OSB U.S.
Slide 7: Map of LP Facilities
LP BUILDING PRODUCTS Map of LP Facilities 1 Peace Valley, BC (JV) eB Dawson Creek, BC Gaiden, BC Vancouver, WA/ @ Red Bluff, CA——* & Sacramento, CA (V}—>—© € & Denver, CO (JV} 45 ‘*———_ 88 Panguipulli, Chile | @ Norfolk, NE (JV) Portland, OR {Regicnai Office) ~~» bie SRR” SETA RERECS : ouisiana-Paci
Slide 8: Oriented Strand Board (OSB)
Oriented Strand Board (OSB) • #1 North American OSB producer with about 23% market share … about 15% share of structural panels • Best geographic coverage allows for a low delivered cost • Growth through existing mill investments and new mills Mill capacities: 13 mills – 5.7 bsf Peace Valley JV – 80
Slide 9: OSB Market Summary
OSB Market Summary 1. OSB growth slowing, but still growing 2-3% market growth per yr. Structural 7% OSB growth per yr. Panel Will start leveling in ~5 years OSB 2. LP the clear OSB leader 70% Opportunities to grow faster than market: LP #1 25% share - Value-added products - Another greenfield mill
Slide 10: OSB Market Share - 2005
OSB Market Share - 2005 Other 10.5% Tolko Industries Louisiana-Pacific 5.3% 22.7% Grant Forest Products 6.7% Huber 7.5% Koch Industries 8.7% Weyerhaeuser 14.0% Norbord Ainsw orth 12.8% 11.8% Source: RISI 2005 Capacity Survey 9
Slide 11: Structural Panel Demand
Structural Panel Demand North America Structural Panel Demand MMSF 50 100% 45 90% 40 35 80% 30 70% 25 20 60% 15 50% 10 OSB Plywood OSB Share 40% 5 0 30% 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: RISI April 2006, 5 year forecast 10
Slide 12: Favorable OSB Supply Outlook
Favorable OSB Supply Outlook Net Additions and OSB Prices – Structural Panels Actual Forecast 30% $400 25% $350 OSB Prices ($/msf - 7/16" basis 20% $300 % of Total Capacity $250 15% $200 10% $150 5% $100 0% $50 -5% 1994 1996 1998 2000 2002 2004 2006 2008 2010 $0 New Capacity as % of Total Capacity O
Slide 13: Engineered Wood Products
Engineered Wood Products • #1 position in solid-sawn I-Joist • #3 position in LVL / I-Joist • Steady demand growth • Aligned and supportive customer base (#1 supplier to 2-step independent distribution) Mill capacities: LVL - 12.1 mmcf I-Joist - 80 mmlf - 140 mmlf (Abitibi JV) OSL – 7 mmcf (2008) 12
Slide 14: EWP Market Summary
EWP Market Summary 1. High EWP Potential: $9 Billion as Engineered Wood Lumber 70% 2. Strand will win future growth - Distributors want full line suppliers - Strand price/performance will displace other technologies - New applications (beam / header; tall wall) Strand 5% Growing 15-20% IJ +LVL (LP t
Slide 15: OSL will substitute for current lumber applications
OSL will be pushed into the existing “LP House” and will substitute for current lumber applications 14
Slide 16: EWP Demand Growth
EWP Demand Growth I-Joist – Billion Linear Ft. LVL – Million Cubic Ft. 110 1.4 100 90 1.2 80 1.0 70 60 .8 50 40 .6 30 .4 20 '98 '99 '00'01 '02 '03'04 '05 '06'07 '08 '09'10 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Source: APA-The Engineered Wood Association 15
Slide 17: Siding
Siding • Smart Side product line exhibiting strong growth: – Family of products – lap, panel, trim, fascia, soffit – Lower installed cost than Fiber Cement, Aluminum, and Wood – Curb appeal / outstanding performance – Hayward conversion in production • Hardboard – lowest cost and broadest product li
Slide 18: Siding Market Summary
Siding Market Summary 1. Huge LP opportunity 2. Growth opportunity: displace other $8.6 Billion siding technologies via: • Focus by product (lap, panel, trim, fascia, soffit) • Clarify and better communicate superior value propositions • Targets: Plywood, solid sawn, fiber cement and vinyl Opportuni
Slide 19: Exterior Siding Market – Market Share by Category – 2005
Exterior Siding Market – Market Share by Category – 2005 Plywood Other Natural Wood 4% 5% 3% Hardboard 5% Vinyl 40% Brick 9% Stucco 10% Smartside 5% Fiber Cement 19% Total Siding Demand in North America in 2005 = 11 billion square feet Source: Ciprus, Freedonia, James Hardie, LP Internal 18
Slide 20: Other Building Products
Other Building Products • Outdoor Living – #2-3 position, excellent decking products (good/better/best strategy) • Chile – operation supporting early South American growth; one mill, another to be completed 2007 • Mouldings – profitable interior business with ability to broaden product line • U.S. G
Slide 21: Composite Decking Market Summary
Composite Decking Market Summary 1. The market continues to grow at double digits - Displacement of treated lumber, now at about 13%, shows no sign of leveling off (forecast: 25-30%) - Wood treaters response: forecasting decline; some entering composites 2. LP in the #2 or #3 position, but had littl
Slide 22: International – Situation Analysis
International – Situation Analysis Global OSB = 27 billion SF U.S. comprises 85 % 2005 Global OSB Demand World Population By Region 27 Billion SF 6.4 Billion People Europe Asia Asia Europe South America South America North America North America Africa Current market Theoretical opportunity The oppor
Slide 23: Very Strong Balance Sheet
Very Strong Balance Sheet In millions except per share 2006 December 31 March 31 2005 2004 Total Cash and Cash Equivalents * $ 1,374 $ 1,395 $ 1,249 Working Capital * 1,524 1,451 1,164 Net Cash and Investments * 966 968 845 Capital Expenditures (YTD) 42 258 180 Depreciation, amortization, and cost o
Slide 24: Conclusions
Conclusions LP has ... • Leadership position in OSB with exceptional geographic distribution • Specialty businesses with sales > $1 billion and growing profitability • A focused business model • Continuing drive to be the low cost producer • Growth opportunities in OSB (commodity and specialty), EWP
Slide 25: Q1 Highlights
Q1 Highlights • Net Sales $680 million • Net Income $84 million … EPS $0.79 • OSB volume up 19% from Q4 and 14% from Q1 05 • EWP profit up 22% from Q4 and 83% from Q1 05 • Siding volume up 10% from Q4 and 13% from Q1 05 • Decking volume up 89% from Q4 and 35% from Q1 05 • Spent $42 million in capita
Slide 26: Questions
BUILDING PRODUCTS Questions 25 BUILD WITH US*
Slide 27: Appendix
LP BUILDING PRODUCTS Appendix 26 BUILD WITH US*
Slide 28: Calculation of Working Capital and Net Cash and Investments
March 31, December 31, December 31, 2006 2005 2004 Calculation of "Working Capital" Current assets $ 1,851 $ 1,797 $ 1,604 Current liabilities (327) (346) (440) Working capital $ 1,524 $ 1,451 $ 1,164 Calculation of "Net Cash and Investments" Long-term debt $ (734) $ (735) $ (623) Current portion of
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