Louisiana-Pacific Corporation

Good day, and thank you for standing by. Welcome to the Louisiana Pacific Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Aaron Holdwell, Vice President, VP, I'm sorry, Investor Relations and Business Development. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining us to discuss LP's results for the second quarter of 2024, as well as our updated outlook. My name is Aaron Holdwell, and I am LP's Vice President of Investor Relations and Business Development. With me this morning are Brad Southern, LP's Chief Executive Officer, and Alan Hockey, LP's Chief Financial Officer. After prepared remarks, we will take one round of questions. During this morning's call, we will refer to a presentation that has been posted to LP's IR webpage, which is investor.lpcorp.com. Our 8K filing, earnings press release, and other materials are also available there, including our recently published 2024 sustainability report. As always, I will caution you that today's discussion contains forward-looking statements and non-GAAP financial metrics, as described on slides two and three of the earnings presentation. The appendix of the presentation also contains reconciliations that are further supplemented by this morning's 8-K filing. Rather than reading those statements, I will incorporate them by reference. And with that, I will turn the call over to Brad.

Thanks, Aaron, and thank you all for joining us this morning. LP Siding and OSB Businesses built on the strong first quarter Executing Our Strategy and Delivering Continued Growth, Share Gains, and Margin Expansion in the Second Quarter of 2024. I will summarize a few of the highlights of the quarter, which are detailed on page five of the presentation, and discuss the factors that contributed to these results before turning the call over to Alan for more detail on the business's performance in the quarter and an update on capital allocation. LP's net sales in the quarter reached $814 million, up 33% compared to prior year. Siding sales grew by 30% in the quarter, the result of 22% higher sales volume and 6% higher prices, both of which were helped by another record quarter for expert finish. In OSB, higher prices and improved mix of structural solutions, value-added OSB, contributed to strong revenue growth. At the same time, leverage from increased volume and operational efficiency improved margins. As a result, LP more than doubled adjusted EBITDA, operating cash flow, and adjusted earnings per share compared to the second quarter of 2023. With the capacity expansion projects of the past two years now complete and the new facilities fully operational, CapEx was a comparatively light $36 million in the quarter. This left a greater proportion of LP's operating cash flow available to return to shareholders. Therefore, consistent with our capital allocation strategy, $120 million were spent on dividends and share repurchases through the quarter. Share repurchases have continued since quarter end, as Alan will detail in a moment. On the lower left of page five, you will see some other highlights. First and most importantly, our business is operated safely. LP wins more than our fair share of industry safety awards. In fact, we were just named the safest company in our category by the APA Engineered Wood Association. But the best reward is sending everyone home safely every day. I want to thank our operations teams for achieving an outstanding total incident rate in the second quarter of 0.6. Siding and OSB both delivered impressive operating efficiency in the quarter, which we measure with OEE. The siding business held OEE flat at 77% despite the complexity of ramping up the most recent siding conversion in Segola, Michigan, and our Greenfield prefinished facility in Bath, New York. The OSB business increased OEE by three points compared to last year. This high-level operating efficiency was a major contributor to the business's cost performance in the quarter. Finally, LP published our 2024 sustainability report in July. As detailed in the report, SmartSight is significantly more sustainable than competing sighting technologies, and most of LLP's products are carbon negative. I want to thank everyone at LP who contributed to the report and to the impressive story it tells. On the left side of page six in the presentation, you will see an updated chart showing normalized growth of sighting volume and revenue compared to U.S. housing starts. The 2024 data for sighting reflects the midpoints of our increased guidance for sighting growth While the housing data is based on fact sets, consensus for housing starts in 2024, which is currently at 1.4 million. As you can see, siting growth continues to exceed that of the underlying housing market as LP gains share in residential construction. The repair remodeling market is more difficult to track, but the general consensus is that R&R spending overall is down by mid-single digits compared to last year. For the record quarter for expert finish or pre-finish siting designed for the R&R market, LP siding business also seems to be gaining share in the R&R segment. In 2024, we expect expert finish to be close to 10% of total siding volume. And given its higher price point, at 10% of volume, expert finish would account for roughly 14% of siding revenue. Expert finish margins improved in the quarter as well, helping siding to achieve a 25% EBITDA margin in the quarter. We believe we have a long runway for growth and share gains in the new construction, R&R, and offsite segments of the siding business, and with both primed and prefinished smart side. And we intend to continue developing new products, expanding our addressable markets, and executing our sales and operations strategies to drive future growth. And with that, I will turn the call over to Alan for more detail on LP's financial performance in the quarter before taking your questions. Thanks, Brad.