Louisiana-Pacific Corporation

Good day and thank you for standing by. Welcome to, excuse me, welcome to the Q1 2025 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 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 that 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 Hobalt, VP of Investor Relations.

Thank you, operator, and good morning, everyone. Thank you for joining us to discuss LP's results for the first quarter of 2025. as well as our updated outlook. On 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 be happy to take a 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 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 materials, I will incorporate them herein by reference. And with that, I'll turn the call over to Brad.

Thanks, Aaron, and thank you all for joining us today to discuss LP's results for the first quarter. As you all know, 2025 began with volatility and disruption in the US and Canadian economies. Tariff uncertainty has weakened consumer sentiment and triggered significant pullbacks in equity markets. Single-family starts fell by 6% in the first quarter due in part to this volatility, as well as some unfavorable weather in the Southeast. The same factors also contributed to a softening in commodity OSB prices. Against this backdrop, LP's siting business continues to grow, expand margins, gain share, and realize higher prices. We also introduce new and more specialized products in the quarter that will add energy to the growth flight well. While we are watching the macro backdrop closely, we see no signs of a slowdown in siting. In fact, our order file is robust and remains on track for a record second quarter. As a result, we are raising our full-year outlook for siting as Alan will detail in a few minutes. Page five of the presentation shows a summary of financial highlights for the first quarter. Net sales in the quarter were $724 million. This is flat the prior year as 11% growth in Siding offset lower OSB prices. EBITDA was down $20 million. To oversimplify a bit, lower OSB prices all flow through to EBITDA, and Siding growth has about a 50% incremental EBITDA margin So a $20 million EBITDA impact from these offsetting revenue changes is about what we would expect. However, OSB prices are temporary, and our goal is to make siding growth permanent. Siding growth means leverage that drives margin expansion. Our siding business delivered a 26% EBITDA margin in the first quarter, and we expect more of the same in the second quarter. If you were able to join us in Las Vegas for the International Builder Show, you might have seen our newest and most specialized siding product. At IBS, we introduced the two-tone expert finish products we're calling our Naturals Collection, which is designed to capture the look of stained wood. Our booth displayed six different pre-finished color combinations, each of which is available in both cedar and brushed smooth finishes. This new collection complements our existing 16-color palette and adds a new aesthetic while still delivering industry-leading durability and ease of installation. We are early in the rollout, but customer response has been very enthusiastic. About 14% of our volume in Q1 was from recently launched products, including about 10% of volume from expert finish. These products drive growth and contribute a positive mix effect on price. We are confident that our new product development pipeline will continue to contribute to growth, material conversion, and share gain for SmartSide. Before I turn the call over to Alan, I know tariffs are top of mind, so let me discuss them briefly. The EBITDA impact of tariffs in the first quarter was about $2 million for siding. This was primarily from retaliatory tariffs imposed on US-made products exported to Canada. We also saw some small impacts on imported raw materials. If the current tariff regime continues through year-end, siding would see an EBITDA impact of about $12 million. This is the assumption we are making for the purpose of updated guidance. We won't speculate about what changes or new tariffs might be announced in the future, but we can affirm what we have said in the past about the paused 25% tariffs with Canada. LP's products are USMCA compliant, making them exempt from US tariffs. If that were to change, which we do not anticipate, we have numerous contingency plans, including flexibility in our supply chains and our operating network. Tariffs could also be a factor in our pricing strategy. And finally, we enjoy the added flexibility of a billion dollars in liquidity. None of that would make us immune from tariffs, but we are confident that we could partially mitigate tariff impacts if the situation changes. Meanwhile, we remain focused on what we can control. Safety, efficiency, product innovation, share gains, growth, leverage, and margin expansion. In a very uncertain environment, the LP team kept their focus and executed our strategy with agility and determination. OSB prices have softened in recent weeks, but as I said a moment ago, our siting order file remains quite strong. I want to take a moment to express how proud I am of our team members and to thank them for their efforts and dedication. I'll conclude by saying that I am very confident that our recent integration of the businesses under a CCO-COO structure reporting to Jason Ringbloom in his new role as LP's president, positions LP for many more years of strategic continuity and execution. And with that, I will turn to Alan for an update on segment results, cash flow, and our updated guidance before we take her questions.