Louisiana-pacific Corporation · NYSE:LPX
Louisiana-pacific — Investor Presentation (February 2006)
28 slides from Louisiana-pacific's investor presentation, February 2006
Slide 1: Louisiana-Pacific Corporation Investor Presentation February, 2006
Louisiana - Pacific Corporation Investor Presentation February, 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 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 Housing S
Slide 4: Home Building Demand
Home Building Demand Housing Starts (single and multi-family) JCH 3.0 Actual Demand 1995 - 2004 New Housing Starts (mm) 2.5 Rolling 5 year Average Average 2.0 1.5 1.0 0.5 0.0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Sources: US Department of Commerce; RISI December 2005, 5 year forecas
Slide 5: Building Market Is Growing and Consolidating
Building Market Is Growing and Consolidating Growth 2004 2010 $750 Billion $900 Billion Consolidation (next 5 yrs.) R&R R&R 28% Home Centers share: 48% Æ 54% 25% Focus on best value supplier New Big builder share 18% Æ 30-40% Construction New Construction 75% Focus on top brands 72% and best value 4
Slide 6: 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 7: 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 8: Growth Potential
Current Portfolio and Direction Strand technology competence Invest –Maximize Growth 28% Acquire and improve 114 International new businesses Trim-SS 21% ? Decking Growth Potential Shift 14% position OSB VA (OSL) LVL Siding-SS OSB 7% Commodity Continuously improve cost position I-Joist Hardboard 0%
Slide 9: Map of LP Facilities
LP. Map of LP Facilities Peace Valley, BC (JV) © Swan Valley, MB Prime, QC LV : me He h . ss a | 1m Norfolk, NE (JV) <a Mitton, On Montreal, QC (Regional Office) ; Te Hares, ; Sagola, Mi Vancouver, WA) as © — 1 Newberry Houlton, Portland, : * f . [Repena Ofice) > —e wr cw Sa een ; s . Hines, R——————
Slide 10: Oriented Strand Board (OSB)
Oriented Strand Board (OSB) • #1 North American OSB producer with about 25% 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 11: 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 12: OSB Market Share
OSB Market Share 2004 Other 25% LP 6% Huber 11% 15% Ainsworth WY 8% GP 13% Norbord Source: RISI 11
Slide 13: 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 December 2005, 5 year forecast 12
Slide 14: Favorable OSB Supply Outlook
Favorable OSB Supply Outlook Net Additions and OSB Prices – Structural Panels Actual Forecast 30% $400 25% $350 $300 OSB Prices ($/msf - 7/16" basis 20% % 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 15: 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 Mill capacities: LVL - 12.1 million cubic feet I-Joist - 80 million lineal feet - 140 million lineal feet (Abitibi JV) OSL – 7 million cubic feet
Slide 16: 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 17: 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 16
Slide 18: 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 trial production • Hardboard – lowest cost and broadest prod
Slide 19: 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) • Clarify and better communicate superior value propositions • Targets: Plywood, solid sawn, fiber cement and vinyl Convert OSB mills
Slide 20: Exterior Siding Market – Market Share by Category – 2003
Exterior Siding Market – Market Share by Category – 2003 SmartSide 4.3% Hardboard 6.4% Vinyl 42.0% Fiber Cement 16.6% Other 4.6% Plywood 3.9% Natural Wood 2.9% Stucco Brick 9.8% 9.3% Total Siding Demand in North America in 2003 = 10 billion square feet Source: Ciprus, Freedonia, James Hardie, LP Int
Slide 21: Other Building Products
Other Building Products • Outdoor Living – #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. Gre
Slide 22: 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 presentation: 25-30%) - Wood treaters response: forecasting decline; some entering composites 2. LP in the #2 or #3 position,
Slide 23: 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 24: Very Strong Balance Sheet
Very Strong Balance Sheet In millions except per share 2005 2004 December 31 December 31 Total Cash and Cash Equivalents * $ 1,395 $ 1,249 Working Capital * 1,451 1,164 Net Cash and Investments * 968 845 Capital Expenditures (YTD) 258 180 (includes JV investments) Depreciation, amortization, and cos
Slide 25: 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 26: Questions
BUILDING PRODUCTS Questions 25 BUILD WITH US*
Slide 27: Appendix
BUILDING PRODUCTS Appendix 26 BUILD WITH US*
Slide 28: Calculation of Working Capital and Net Cash and Investments
December 31, 2005 2004 Calculation of "Working Capital" Current assets $ 1,797 $ 1,604 Current liabilities (346) (440) Working capital $ 1,451 $ 1,164 Calculation of "Net Cash and Investments" Long-term debt $ (736) $ (623) Current portion of long term debt (18) (178) Current portion of limited reco
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