Louisiana-pacific Corporation · NYSE:LPX
Louisiana-pacific — Investor Presentation (February 2019)
28 slides from Louisiana-pacific's investor presentation, February 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION February 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: Our Mission
OUR MISSION To be the leading building solutions company serving large, profitable and growing markets – where we can create and sustain competitive advantage through a distinctive customer value proposition, our strong and growing brand equity and focus on innovative, high performance products, wit
Slide 5: Creating a Leading Building Solutions Company
CREATING A LEADING BUILDING SOLUTIONS COMPANY A LEADER IN OUR MARKETS $3B proven leader in engineered wood Siding technologies with • #1 producer of treated engineered wood siding with strong national presence market-leading • Capacity expansion projects underway positions OSB • Leading producer of
Slide 6: Unique Specialty Products That Add Value
UNIQUE SPECIALTY PRODUCTS THAT ADD VALUE Market Demand: Aesthetics Smoother texture, straight edge, and Narrow Panel for use with SmartSide Trim Market Demand: Energy Efficiency The #1 brand of radiant barrier blocking up to 97% of radiant heat to lower attic temperatures and reduce home cooling cos
Slide 7: Strategic Pillars
STRATEGIC PILLARS Build best-in-class Focus capital and Innovate to create Actively manage operations, supply talent on attractive offers that are corporate portfolio chain and customer segments differentiated, via organic growth / commercial willing to pay for deliver value to LP’s M&A to create ne
Slide 8: 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 9: Transforming to Become the Leading Building Solutions Company
TRANSFORMING TO BECOME THE LEADING BUILDING SOLUTIONS COMPANY
Slide 10: Move to Building Solutions to Reduce Volatility
MOVE TO BUILDING SOLUTIONS TO REDUCE VOLATILITY Producing more Legacy LP LP Transformation consistent and • Commodity OSB focus • Focus on higher value-add sustainable and higher margin Siding • Limited value-added / results, greater specialty product and specialty products, growth while improving p
Slide 11: New Product Innovation
NEW PRODUCT INNOVATION Accelerate Shift to Higher-Margin New Products • Effectively launch LP Smooth Strand to unlock new builders and regions requiring smooth aesthetics • Launch integrated Weather Resistant Barrier panel Leverage Innovation as a Catalyst for Growth • Increase range through the add
Slide 12: Programmatic M&A – Part of the Transformation
PROGRAMMATIC M&A – PART OF THE TRANSFORMATION Strategic Role for M&A Doing M&A Right Recent M&A • Accelerate organic trajectory • Choose where to play • Barrier Technologies – October • 75% of growth comes from the 2017 • Enable active portfolio momentum in the markets in management to transition to
Slide 13: Building a Performance Based Culture
BUILDING A PERFORMANCE BASED CULTURE TRANSFORMING LP’S CORPORATE CULTURE Investing in Talent Thinking and Acting • Added resources to support corporate and Like Owners business training efforts • Results-driven, • Assessments and rotating 360 review value maximization process focused, • Focus on att
Slide 14: Refreshed Leadership Team Driving Transformation
REFRESHED LEADERSHIP TEAM DRIVING TRANSFORMATION Brad Southern New to Role Chief Executive Officer Not new to role Alan Haughie Timothy Mann Jr., Mike Blosser Frederick Price Executive Vice President, Executive Vice President, Senior Vice President, President, South America Chief Financial Officer G
Slide 15: Q4 and Full Year 2018 Results
Q4 AND FULL YEAR 2018 RESULTS
Slide 16: 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 17: Highlights
HIGHLIGHTS ($ in millions, except per share amounts) Q4 2018 Q4 2017 YTD 2018 YTD 2017 Net Sales 589 711 2,828 2,734 Net Income 17 131 395 390 Diluted EPS 0.12 0.89 2.73 2.66 Adj. income from continuing operations 27 105 397 339 Adj. diluted EPS from continuing operations 0.19 0.71 2.75 2.32 Adj. EB
Slide 18: 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 administrative 57 (11) 209 (18) Impairments of long-lived assets 11 (3) 11 (4) Other op
Slide 19: Sales and Adjusted EBITDA by Segment
SALES AND ADJUSTED EBITDA BY SEGMENT ($ in millions) 19
Slide 20: 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 21: Overview of 2018 Cashflow
OVERVIEW OF 2018 CASHFLOW • Reinstituted Dividend $928M + • Over $200M in Share Repurchases $511M Cash from Cash available at operations in • Developed Capital Allocation year end 2017 2018 Priorities $(215)M CapEx $1,224M Available for share repurchases, dividends, M&A CAPITAL M&A OTHER NET RETURN
Slide 22: Capital Allocation Plan
CAPITAL ALLOCATION PLAN
Slide 23: Transformation Is in Progress
TRANSFORMATION IS IN PROGRESS • Business Transformation • LP continues its transformation from a commodity OSB producer to a more stable, cash generative business by significantly improving its revenue and EBITDA mix • Additional Opportunities for Improvement • We remain focused on further improving
Slide 24: LP Has Substantially Improved Its Business Mix
LP HAS SUBSTANTIALLY IMPROVED ITS BUSINESS MIX… SALES MIX1 SMARTSIDE STRAND SALES ($ in millions) 2015 VS. 2018 60% $1,000 48% 43% 2015A 40% 35% 30% $500 15% CAGR 20% 14% 15% 6% 6% 1% 1% $0 0% OSB Siding EWP LPSA Other 2015 2016 2017 2018 EBITDA MIX1 2015 VS. 2018 40% 90% 79% 59% 2015A 2018A 60% 49%
Slide 25: Significant Cash Flow Generation Potential Under a 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 26: 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 27: 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 28: 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
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