Louisiana-pacific Corporation · NYSE:LPX
Louisiana-pacific — FY2018 Earnings Presentation
31 slides from Louisiana-pacific's earnings presentation, Feb 13, 2019
Slide 1: 2018 Earnings Presentation
2018 EARNINGS PRESENTATION February 13, 2019
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- U.S. GAAP financial information will be presented. Reconciliation of those numbers to U.S. GAAP financial measures are available on the company’s website at www.lpcorp.com under the Inve
Slide 4: Highlights
HIGHLIGHTS 4
Slide 5: Q4 and Full Year 2018 Highlights
Q4 AND FULL YEAR 2018 HIGHLIGHTS Siding • Record full-year sales and EBITDA, driven by 12% revenue growth in Smart Side Strand (8% volume, 5% price) • Continued progress in Q4 with 10%+ Smart Side Strand revenue growth (5% volume, 5% price) • Siding segment results were negatively impacted in the fo
Slide 6: Strategic Updates
STRATEGIC UPDATES Business Transformation • LP continues its transformation from a commodity OSB producer to a more stable, cash generative business by significantly improving its revenue and EBITDA mix Additional Opportunities for Improvement • We remain focused on further improving our business mi
Slide 7: LP's Top Priorities Are Growing Siding, Improving OSB Performance, and Returning Capital
LP’S TOP PRIORITIES ARE GROWING SIDING, IMPROVING OSB PERFORMANCE, AND RETURNING CAPITAL TO SHAREHOLDERS Siding Strategy/Value OSB Strategy/Value Return Capital to Drivers: Drivers: Shareholders: • Expand siding capacity: • Drive value-added • Execute remaining significant optionality product growth
Slide 8: Q4 and Full Year 2018 Results
Q4 AND FULL YEAR 2018 RESULTS 8
Slide 9: Financial Results
FINANCIAL RESULTS ($ in millions, except per share amounts) FOURTH QUARTER FULL YEAR 2018 B/(W) Pr Yr 2018 B/(W) Pr Yr Sales 589 (122) 2,828 94 Cost of Sales 496 - 2,084 86 Gross Profit 93 (122) 744 8 Selling and adminstrative 57 (11) 209 (18) Impairments of long-lived assets 11 (3) 11 (4) Other ope
Slide 10: Sales and Adjusted EBITDA by Segment
SALES AND ADJUSTED EBITDA BY SEGMENT ($ in millions) FOURTH QUARTER FULL YEAR Sales 2018 B/(W) Pr Yr 2018 B/(W) Pr Yr SIDING 213 - 942 58 OSB 255 (103) 1,305 2 EWP 76 (16) 391 25 SOUTH AMERICA 39 (1) 161 6 OTHER 6 (2) 29 (1) INTERSEGMENT - - - 4 589 (122) 2,828 94 Adj. EBITDA SIDING 42 (12) 235 15 O
Slide 11: Siding Comparison – Q4 2018 versus Q4 2017
SIDING COMPARISON – Q4 2018 VERSUS Q4 2017 ($ in millions) $11 ($6) ($8) ($5) $53 ($2) $43 Increased Increased downtime at marketing SmartSide Strand Investment in Significant Roaring River, NC investment revenue growth OSB mill headwind from (Fiber) and East ahead of new of 10%, offset in conversio
Slide 12: Overview of 2018 Cashflow
OVERVIEW OF 2018 CASHFLOW • Reinstituted Dividend $511M • Over $200M in Share Repurchases $928M Cash available at + Cash from operations in • Developed Capital Allocation 2018 year end 2017 Priorities $(215)M CapEx $1,224M Available for share repurchases, dividends, M&A CAPITAL M&A OTHER NET RETURN
Slide 13: Strategic Update and Capital Allocation Plan
STRATEGIC UPDATE AND CAPITAL ALLOCATION PLAN 13
Slide 14: LP Has Substantially Improved Its Business Mix
LP HAS SUBSTANTIALLY IMPROVED ITS BUSINESS MIX… SALES MIX SMARTSIDE STRAND SALES ($ in millions) 2015 VS. 2018 $800 60% 48% 43% 2015A 2018A $600 40% 35% 30% $400 15% 15% CAGR 20% 14% 6% 6% $200 1% 1% 0% $0 OSB Siding EWP LPSA Other 2015 2016 2017 2018 EBITDA MIX % VALUE ADD OSB VOLUME 2015 VS. 2018
Slide 15: Significant Cash Flow Generation Potential Under Variety of OSB Prices
… RESULTING IN SIGNIFICANT CASH FLOW GENERATION POTENTIAL UNDER A VARIETY OF OSB PRICES The scenarios below do not reflect our targeted additional $100M+ of after-tax cash flow by 2021, driven by (1) organic growth in Siding and South America, (2) benefits from improved OEE, supply chain optimizatio
Slide 16: Substantial Efficiency Opportunities to Capture by 2021
WE SEE SUBSTANTIAL EFFICIENCY OPPORTUNITIES TO CAPTURE BY 2021 Category Details EBITDA Impact Plant Operations • Sustainably improve Overall Equipment Effectiveness (OEE), resulting in improved efficiency of Siding and OSB ~$40M mills through increased volume, run time and quality Supply Chain Optim
Slide 17: Capital Allocation Plan
CAPITAL ALLOCATION PLAN As a result of LP’s improved business mix and more stable cash flow profile, we are transitioning to a more efficient capital allocation plan with an increased focus on returning cash to shareholders Current $878M $200M $350M $1,028M (-) (+) (=) Liquidity Cash at 2018 year en
Slide 18: 2019 Guidance and Long-Term Targets
2019 GUIDANCE Capital Investment $150M – $180M Strand Siding Revenue Growth 12-14% OSB OEE improvement1 1.7 pts LONG-TERM TARGETS Volume from value-added OSB 50%+ Annual Siding Strand Revenue Growth 12-14% Overall Siding EBITDA Margin 20%+ % Cash Flow from Operations to be returned to shareholders i
Slide 19: Appendix
APPENDIX 19
Slide 20: Updated Segment Reporting Numbers
UPDATED SEGMENT REPORTING NUMBERS 2018 Annual Results1 1 Reflects the reallocation of a significant portion of general corporate and other 20 expenses consistent with recent business realignment efforts.
Slide 21: Financial Results
FINANCIAL RESULTS ($ in millions, except per share amount) Note: Refer to LP Form 8K filed on February 13, 2019 for the reconciliation of Adjusted income from continuing operations, EBITDA from continuing operations, Adjusted EBITDA from continuing operations and Adjusted EBITDA Margin 21
Slide 22: Siding
SIDING ($ in millions) a Operating income equals sales less cost of sales and selling and administration directly associated with the segment. b Adjusted EBITDA from continuing operations 22
Slide 23: OSB
OSB ($ in millions) a Operating income equals sales less cost of sales and selling and administration directly associated with the segment. b Adjusted EBITDA from continuing operations 23
Slide 24: Engineered Wood Products
ENGINEERED WOOD PRODUCTS ($ in millions) a Operating income equals sales less cost of sales and selling and administration directly associated with the segment. b Adjusted EBITDA from continuing operations 24
Slide 25: South America
SOUTH AMERICA ($ in millions) a Operating income equals sales less cost of sales and selling and administration directly associated with the segment. b Adjusted EBITDA from continuing operations 25
Slide 26: Fourth Quarter 2018 Adjusted EBITDA Reconciliation
FOURTH QUARTER 2018 ADJUSTED EBITDA RECONCILIATION Three Months Ended December 31, 2018 South (Dollar amounts in millions) Siding OSB EWP America Other Corporate Total Net income (loss) $ 33.8 $ 26.1 $ (0.4) $ 6.0 $ (1.3) $ (47.2) $ 17.0 Loss from discontinued operations — — — — (0.1) — (0.1) Benefi
Slide 27: Fourth Quarter 2017 Adjusted EBITDA Reconciliation
FOURTH QUARTER 2017 ADJUSTED EBITDA RECONCILIATION Three Months Ended December 31, 2017 South (Dollar amounts in millions) Siding OSB EWP America Other Corporate Total Net income (loss) $ 45.8 $ 136.7 $ 3.1 $ 7.9 $ (0.9) $ (62.1) $ 130.5 Loss from discontinued operations — — — — 0.3 — 0.3 Benefit fo
Slide 28: Year End 2018 Adjusted EBITDA Reconciliation
YEAR END 2018 ADJUSTED EBITDA RECONCILIATION Year Ended December 31, 2018 South (Dollar amounts in millions) Siding OSB EWP America Other Corporate Total Net income (loss) $ 201.6 $ 395.7 $ 19.5 $ 31.0 $ (8.5) $ (244.7) $ 394.6 Loss from discontinued operations — — — — 5.6 — 5.6 Benefit for income t
Slide 29: Year End 2017 Adjusted EBITDA Reconciliation
YEAR END 2017 ADJUSTED EBITDA RECONCILIATION Year Ended December 31, 2017 South Siding OSB EWP Other Corporate Total (Dollar amounts in millions) America Net income (loss) $ 188.7 $ 427.3 $ 15.7 $ 24.3 $ (4.7) $ (261.5) $ 389.8 Loss from discontinued operations — — — — 2.0 — 2.0 Benefit for income t
Slide 30: Adjusted Income Reconciliation
ADJUSTED INCOME RECONCILIATION (Dollar amounts in millions, except per share amounts) Quarter Ended December 31, 2018 December 31, 2017 Net income $ 17.0 130.6 Add (deduct): (Income) loss from discontinued operations (0.1) 0.2 Loss on sale or impairment of long-lived assets, net 11.1 8.6 Other opera
Slide 31: Reconciliation of Cash Flow at Normalized OSB Prices
RECONCILIATION OF CASH FLOW AT NORMALIZED OSB PRICES (Dollars in millions) Year Ended December 31. 2015 2018 Cash provided from operating activities $ 29 $ 511 1 After-tax impact of cycle average OSB prices 175 (180) 2 Other 4 (11) Adjusted cash from operating activities at normalized OSB prices $ 2