Louisiana-pacific Corporation · NYSE:LPX
Louisiana-pacific — Investor Presentation (February 2020)
28 slides from Louisiana-pacific's investor presentation, February 2020
Slide 1: Investor Presentation February 2020
INVESTOR PRESENTATION February 2020
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. Factors that could cause actual results to d
Slide 3: Statement Relating to the Use of Non-GAAP Financial Measures
STATEMENT RELATING TO THE USE OF NON-GAAP FINANCIAL MEASURES During the course of this presentation, certain non-GAAP financial measures will be presented. Non-GAAP financial measures should be considered only as a supplement to, and not as superior to, financial measures prepared in accordance with
Slide 4: LP's Mission
LP’s MISSION We help our customers build beautiful, durable homes so that our shareholders can build lasting value
Slide 5: Who Is LP?
WHO IS LP? ▪ Founded in 1973 (LPX) ▪ Proven leader in uniquely innovative building solutions ▪ Committed to stewardship of natural resources ▪ 4,800 Employees ▪ 26 Manufacturing Plants: ▪ 16 in the U.S. ▪ 6 in Canada ▪ 3 in Chile ▪ 1 in Brazil PAGE 5
Slide 6: LP Is a Leader in Our Markets
LP IS A LEADER IN OUR MARKETS Siding • #1 producer of engineered wood siding • Consistent growth above housing and R&R Proven leader in engineered • Stable earnings to fund dividend & expansion wood technologies with • Growing presence in pre-finished siding market-leading positions OSB • Leading pr
Slide 7: LP Portfolio of Building Solutions
LP PORTFOLIO OF BUILDING SOLUTIONS 7
Slide 8: We Solve Problems for Our Customers
WE SOLVE PROBLEMS FOR OUR CUSTOMERS • Our customers cite labor as a major constraint to building • WeatherLogic and Prefinished SmartSide address this by combining multiple steps into a single system • Entekra is innovating the building process with Fully Integrated Off- Site framing PAGE 8
Slide 9: LP Value Spectrum
LP VALUE SPECTRUM * Our strategy is to convert commodity OSB to Structural Solutions, and ultimately to Siding * WL = WeatherLogic, FB = FlameBlock PAGE 9
Slide 10: Growing Siding Above Starts and R&R with Stable Prices and Margins
WE ARE GROWING SIDING ABOVE STARTS AND R&R WITH STABLE PRICES AND MARGINS PAGE 10
Slide 11: OSB - Transcending Commodity Volatility
OSB - TRANSCENDING COMMODITY VOLATILITY Metric Q3 2015 → Q3 2019 Manufacturing Capacity ↓ 200 MMSF, ~15% OSB Production ↓ 100 MMSF, ~10% Capacity Utilization Rate ↑ 6 points Structural Solutions as % Total Production ↑ 5 points Market Price (6-region Random Lengths Avg) ↓ $4 LP Avg. Sales Price ↑ $1
Slide 12: Shareholder-Focused Capital Allocation
SHAREHOLDER-FOCUSED CAPITAL ALLOCATION • $638M share buyback and $66M of dividends in 2019 • Transformation allows us to generate significant cash flow in a variety of macro environments • Committed to returning at least 50% of cash flow from operations in excess of investments for maintenance capit
Slide 13: LPX Beats S&P 500 on 1, 3, and 5-Year Basis
LPX BEATS S&P 500 ON 1, 3, AND 5-YEAR BASIS Source: Factset PAGE 13
Slide 14: LPX Investment Thesis
LPX INVESTMENT THESIS • A leader in our markets • Innovating to solve problems for our customers • Driving our products up the value spectrum • Growing Siding above underlying market • Transcending OSB commodity price volatility • Deploying capital efficiently • Generating returns above market PAGE
Slide 15: Q4 2019 Highlights
Q4 2019 HIGHLIGHTS
Slide 16: Q4 2019 Highlights
Q4 2019 HIGHLIGHTS Growth in a Challenging Market ▪ 11% SmartSide Strand revenue growth for Q4 ▪ 10% SmartSide Strand revenue growth for 2019 ▪ 45% of OSB volume from Structural Solutions portfolio in Q4 Operational Execution ▪ $100M cash generated from operations in Q4 ▪ OEE continues to exceed tar
Slide 17: Transformation
TRANSFORMATION U.S. Single Family Housing Starts1 TTM SmartSide® Strand Revenue ($M) Full Year 2019 vs 2018 1% +10% Segment Growth Efficiency Total 876 888 Siding $19 $13 $32 OSB $9 $23 $32 EWP & LPSA - $4 $4 2019 EBITDA Impact $28 $40 $68 2018 2019 2018 2019 SmartSide Strand Growth (Full Year) 2021
Slide 18: Financial Performance
FINANCIAL PERFORMANCE ($ in millions, except per share amount) Quarter Ended Dec. 31 Year Ended Dec. 31 ($ in millions, except per share amount) 2019 B/(W) 2018 2019 B/(W) 2018 Sales $ 537 $ (52) $ 2,310 $ (518) Cost of sales (467) 28 (2,007) 77 Gross profit 70 (24) 303 (441) Selling, general, and a
Slide 19: Revenue and EBITDA by Segment
REVENUE AND EBITDA BY SEGMENT ($ in millions) PAGE 19
Slide 20: Siding – Q4 2019 vs 2018
SIDING – Q4 2019 VS 2018 ($ in millions) $8 $42 $2 $1 $0 $34 $5 EBITDA: Siding Prod. SmartSide® Volume +$4 Strand OSB Sales ($2) revenue Other ($1) growth of 11%, Revenue: Price flat OSB Sales ($5) CanExel +$2 Other +1 2018 Adjusted Strand Sales & Efficiency Other 2019 Adjusted EBITDA Siding Marketi
Slide 21: Siding - FY 2019 vs 2018
SIDING - FY 2019 VS 2018 ($ in millions) $(25) $(12) $13 $(18) 202 $31 $(19) $(12) $177 $(8) SmartSide® Increased Operational Investment OSB sales Fixed cost sales & in OSB mill volume Raw material Strand savings from absorption marketing conversion down & energy revenue Overall from Down investment
Slide 22: OSB - Q4 2019 vs 2018
OSB - Q4 2019 VS 2018 ($ in millions) $(28) $34 $10M from reduction Commodity Fixed cost absorption in LCM1 reserves due volume to increased ASP2; down from Down Structural Peace Valley Time & $5M from lower (29)% freight; Solutions mix curtailment Finished $(38) up 7 ppts to fixed cost Goods Hancev
Slide 23: OSB – FY 2019 vs 2018
OSB – FY 2019 VS 2018 ($ in millions) Commodity price down (38)%, Structural Solutions down (30)% $(415) $425 Commodity Structural OEE $8M, Fixed cost $9M volume Solutions Supply Chain absorption reversal of down mix up 4 Optimization from Down LCM1 (17)% ppts to $3M Time & reserves due 43% Finished
Slide 24: Cash Flow
CASH FLOW ($ in millions) PAGE 24
Slide 25: Cash Flow Transformation
CASH FLOW TRANSFORMATION 2018 Normalized 2019 Cash from 2109 Normalized cash from operations @ actual cash from operations operations OSB price of $184 @ OSB price of $260 $347M1 $320M $33M Ave. annual improvement target $159M $140M $125M $92M $260 $200 $184 2019 2019 per MSF per MSF per MSF Target
Slide 26: 2020 Guidance and Long-Term Targets
2020 GUIDANCE Capital investment $130M - $140M Strand Siding revenue growth 10 - 12% LONG-TERM TARGETS Growth & Efficiency Gains over 3 years $165M Volume from Structural Solutions 50%+ Annual Siding Strand revenue growth 10 - 12% Overall Siding EBITDA margin 20%+ Phase II of Capital Allocation Plan
Slide 27: Appendix
APPENDIX
Slide 28: Entekra Video
ENTEKRA VIDEO SS ENTEKRA BUILDING SOLUTIONS PAGE 28
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