Louisiana-Pacific Corporation

Good day and thank you for standing by. Welcome to the Q3 2024 Louisiana Pacific Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aaron Howald, Vice President, Investor of Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining us to discuss LP's results for the third quarter of 2024, as well as our updated outlook for the fourth quarter and full year. Hosting the call 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 8-K filing, earnings press release, and other materials are also available there. As always, I will caution you that today's discussion may contain 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 again for joining us today. LP's teams continue to execute our strategy effectively in the third quarter. As a result, siting net sales grew by 22%, well above the underlying markets we serve. Siting set new records for sales in EBITDA, helped by ongoing improvements in expert finish margins. Our OSB business operated safely and efficiently with strong price realization to make the most of a sequentially softer price environment. Page five of the presentation shows LP's high-level financial results for the quarter. LP generated $722 million in net sales, with 22% siding growth almost completely offsetting the $88 million impact of lower commodity OSB prices. Siding's EBITDA of $123 million was a record. Expert finish saw another record quarter for both revenue and margin, with margin expansion driven by higher volumes and efficiency improvements at our dedicated pre-finishing facilities. $153 million of EBITDA translated cleanly into $184 million of operating cash flow. We invested this cash in our future growth with $44 million in capital expenditures in the quarter before returning $91 million to shareholders through dividends and share repurchases, leaving LP with nearly $900 million of liquidity and a very strong balance sheet. Let me turn briefly to the market and what we are seeing in the channel. The new home construction market is slowing somewhat with the combined effects of the recent rebound in mortgage rates and the approach of colder weather. Housing starts have leveled at about 1.4 million in recent months, which is also the current consensus for next year, but the single-family mix remains higher than average. In the new construction market, LP is over-indexed to single-family starts so it was encouraging to see the run rate for single-family starts back above one million in the September census report. Repair and remodeling spend is still a few percentage points lower than last year, but the outlook for R&R has improved. The recently published leading indicator of remodeling activity published by the Harvard Joint Center for Housing Studies suggests that R&R spending has bottomed and projects a return to positive year-over-year growth in 2025. Given that about a third of LP SmartSide siding goes for R&R applications, this is a positive development. We believe inventories in the channel are within normal seasonal ranges. OSB inventory is somewhat leaner, which may be contributing to recent strength in commodity prices. Siding inventory is similar in absolute volume to this time last year, but lower in days of sales and consistent with normal seasonal patterns. We have announced a price increase for next year in siting, and that will be a factor as we manage year-end shipments to position ourselves and the channel for a strong start to 2025. Looking forward, interest rates and affordability remain the dominant macroeconomic factors to watch, but housing under supply and the aging housing stock must ultimately be resolved. We believe that LP is uniquely well positioned to address these needs, and as a result, we are confident that we will continue to grow siting and structural solutions in 2025 and beyond. Our results demonstrate that LP's strategy is working and reinforce our confidence to invest in future growth, which Alan will speak to in a moment. Before I turn the call over to him, I'll highlight two additional accomplishments from the quarter. First, LP published environmental product declarations for the entire SmartSide trim and siting product portfolio. These EPDs, validated by ASTM and International, confirm that SmartSide, Expert Finish, and Builder Series products are carbon negative, meaning they store more carbon than is emitted throughout their lifecycle. This is made possible by our sustainable use of renewable fiber resources, as well as our innovative and efficient manufacturing processes. And I want to thank the LP teams that support this, especially Forestry, Operations, and our sustainability team. Last and most importantly, LP was notified in August that we had earned the 2023 Safest Company Award from APA, the Engineered Wood Association. This is the 12th time in the 16-year history of the award program that LP has won the Safest Company designation. Five of our mills also won individual safety recognitions. I want to thank and congratulate every LP team member for this recognition. and challenge us all to keep building upon LP's high performance safety culture. Safety is a core value for all of us at LP, and while we are pleased with the honor, we won't rest on our laurels. And with that, I will turn the call over to Alan for more detail on our results and guidance before we take a round of questions.