Louisiana-Pacific Corporation

Thank you for standing by. 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 -and-answer session. To ask a question during the session, you'll need to press -one-one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press -one-one 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 Hobelt, 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 .lpcorp.com. Our 8K 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 8K 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 U.S. and Canadian economies. Terrifying 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 introduced 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 Allen will detail in a few minutes. Page 5 of the presentation shows a summary of financial highlights for the first quarter. Net sales in the quarter were $724 million. This is flat to prior year as 11% growth in siting offset lower OSB prices. EBITDA was down $20 million. To oversimplify a bid, lower OSB prices all flow through to EBITDA. And siting 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 siting growth permanent. Siting growth means leverage that drives margin expansion. Our siting 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 siting product. At IBS, we introduced the two-tone expert finish products we are 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 brush 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 terrors are top of mind, so let me discuss them briefly. The EBITDA impact of terrors in the first quarter was about $2 million for siting. This was primarily from a territory terrace 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, siting 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 terrors might be announced in the future, but we can affirm what we have said in the past about the paused 25% terrace with Canada. LPs 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. Terrors could also be a factor in our pricing strategy. And finally, we enjoy the added flexibility of $1 billion 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 siding 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 Ringblum and his new role as LP's president, positions LP for many more years as strategic continuity and execution. With that, I will turn to Alan for an update on segment results, cash flow, and our updated guidance before we take your questions.

Thanks, Brad. Pages 8 and 9 of the presentation show the first quarter -over-year revenue and EBITDA bridges. Both are fairly straightforward, but a few factors bear some discussion. For siding on page 8, 9% higher volumes and 2% higher prices compounded for 11% revenue growth. Volume growth actually outperformed single-family starts in the quarter by 15 points, consistent with ongoing material conversion and share gains boosted by robust demand for panel products. All these shed customers are experiencing what appears to be a sustainable recovery after a long period of soft demand, following the surge they experienced during COVID. I should also mention that although the margin on panels is healthy, they are priced below lap trim and soffit. So while panel growth boosted volumes and helped with margins, it also brought a negative price mix effect that offset the positive mix effect from higher expert finish. In other words, please don't infer any slowdown in expert finish from the softer -over-year price growth. On the contrary, the first quarter set records for both volume and revenue in expert finish. Other variances in the quarter were minor, with a $5 million increase in selling and marketing spend, and minor variances in labor, raw material costs, and freight netting to zero.

Tariff

impact rounded to about $2 million in the quarter, without which, and it bears repeating, the first quarter EBITDA margin would have rounded to 27% instead of the reported 26%.

So for siding,

despite the tariff-induced market volatility, it was a solid quarter for pricing power, growth, share gains, operating leverage, and therefore for margin expansion. And that trend continues into the second quarter, in which siding orders are on pace to set new records for both volume and revenue. For OSB on page 9, the bridge is dominated by commodity OSB price fluctuations, as is so often the case. Lower prices resulted in a $32 million reduction in revenue in EBITDA. A mixed shift from structural solutions to commodity, which is not uncommon in soft OSB markets, resulted in a net reduction of $13 million in revenue and $7 million in EBITDA compared to the prior year. And just as with the siding segment, all of the variances were quite minor by comparison. Page 10 shows cash flow for the quarter. As you will recall, we typically use cash to build working capital in the first quarter, primarily log inventory to prepare our mills for the spring breakup. And working capital increases consumed about $74 million, with taxes, interests, and other costs combining for a further $24 million of outflow. We invested $64 million in capital projects, spent $61 million to repurchase shares, and paid $20 million in dividends. And this brought our ending cash balance to $256 million. Having recently expanded our revolving credit facility to $750 million, which I should add is completely undrawn, LP had a billion dollars in liquidity at the end of the quarter. And to save you the trouble in Q&A, no, we're not planning to borrow from the expanded revolver to fund share repurchases. We will continue to earn the cash, invest in growth, and return cash to shareholders in that order. Which brings me to LP's updated guidance on page 11. As already stated more than once, commodity prices have softened recently, while siding appears to be on track for a record second quarter. We anticipate -over-year revenue growth in the 9% to 10% range for siding, generating between $445 and $455 million in revenue. An EBITDA margin of about 26% implies EBITDA between $110 and $120 million. These results would not only be records for revenue in EBITDA, but would also exceed the volume records set during the peak of COVID devound, a year that saw almost 1.6 million housing starts in the US. For the full year, we now expect siding revenue of about $1.7 billion and EBITDA between $425 and $435 million. We're applying the same philosophy to our tariff assumptions as we did in our first quarter guide three months ago, namely that the current state continues through the remainder of the year, a state which leads us to expect roughly $12 million of tariff headwind in EBITDA. Despite this, we've increased the midpoint of our guide by $10 million, which can be thought of as a $22 million increase in EBITDA from growth and leverage, partly offset by the $12 million of tariff impact. For OSB, with random lengths falling recently, a prudent modeling approach would be to assume that commodity OSB prices remain flat at last Friday's level for the remainder of the year, which is exactly what we've done. So with that assumption, the second quarter OSB EBITDA should be in the $15 to $25 million range. Extending the midpoint of that range through the second half of the year yields a full year EBITDA estimate for OSB of $110 to $120 million. Now for the avoidance of doubt, this is not an attempt to predict actual commodity prices. This is simply a conservative approach that we hope is useful for modeling.

So in summary,

it was a surprisingly clean quarter given the noisy and turbulent market backdrop. And while consumer sentiment in commodity prices are being pressured by tariff uncertainty, our siding order file seems to be weathering the storm nicely so far. And with that, I'd like to open up the call for Q&A. Operator?

Thank you. At this time, there will be a Q&A session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, press please press star 1-1 again. Please be advised that today's conference is being recorded. Please stand by while we

compile the Q&A roster. Our first question today is from

Keaton Mimtora with BMO Capital Markets. Your line is open.

Thank you, and congrats on a strong quarter and siding. Maybe to start there, can you talk about sort of two or three key drivers for this outperformance versus single family start? And if you can just talk about how the R&R piece of this demand is also holding up.

Keaton, I'd be glad to answer that. Thank you. Really, we have seen strength, and the Q1 saw strength across our entire order file. If there was any weakness at all, it was at the home centers in Q1. We saw a particular improvement in shed orders compared to Q1 of last year where we had a pretty weak Q1, so the comp there was kind of easy. But in order to hit the numbers that we did, we did see strength in both the R&R sector as evidenced by the volumes of expert finish that we sold and then a little bit of a surprise that our new construction and normal two-step distribution business held up really well as well. So it really wasn't across the board strength in the order file with particular strength on the shed side, as Alec mentioned, with the panel sales.

Understood. And just as my follow-up, how do you feel about inventories in the channel at the moment, given the uncertainty around tariffs and just the macro backdrop? As you look at both the home center channel and the pro channel, how would you characterize inventories? And this is specifically to siding.

Well, first of all, in the home center inventories, what we are pretty sure happened in Q1 was they pulled down inventories because we know that the sell-through for our products at the home center was good, though our intake of orders in Q1 wasn't. So there was inventory pulled down at the home center, so now I would call those normal. And then in the channel, seasonally where it needs to be, given the fact that spring is breaking across the country, so a little high compared to an annual number, but right where we like it to be as far as the seasonality. And some evidence of that is we're prompt on our order file and siding, so distributors are able to get shipments depending on the SKU in two to three weeks. So there really isn't a need for distribution to build inventory because of our prompt delivery, given the fact that Sagola is running so good now. So we feel good about inventories as it relates to siding, and I'll go ahead and answer too on the OSB side. They may be a little lean right now, given the movement on pricing. So I would say overall, the inventories for both products are where they need to be or a little light in the case of OSB.

Thank you. That's very helpful. I'll jump back in the queue.

Thank you,

Keith. Thank you. Our next question is from Michael Roxland with Turr's Securities. Your line is open.

Yeah, thank you, Brad, Alan, and Aaron for taking my questions, and I'll just echo Keith in the two comments. Congrats on a very good quarter, despite the backdrop. Thanks, Bob. In terms of your siding margin, I wanted to get a sense of how we should think about the progression of that margin in the back half of the year, maybe into 2016, particularly as you're expanding, holding your second investment. Your guidance also seems to imply some margin weakness relative to one age, and that could just be conservatism or cautiousness. I get that. But shouldn't siding margins as you confer holding can trend down? And if so, when do you expect that to take place?

Yeah, well, I'll start with the question about the second half. Yeah, I'm speaking frankly. We always have produced what we like to think of as a safe forecast, and obviously some of the conservatism that I had baked in to the first half, mostly in Q2, we've released. My fears around unidentified inflationary costs have so far not materialized, thankfully. And we are, of course, continuing to make sure that we provide adequate room for the operating flexibility that I so often tout as the, let's call it the reason for what is seen as margin conservatism. So there's no, I would say I'd take the over on the second half versus the under, particularly given the non-materialization of my inflationary fears and the way the order files progressing. But in 2027, next year, what year is next year? 2026, sorry, left over 2026. Yes, we all other things being equal, we should see some margin expansion in 2026 because there'll be no material impacts on the profit side from the investments in the new capacity. They won't be here until at least 2027.

Got it. I appreciate that, Don. Thank you. And then just one quick follow up on OSB. Obviously, capacity continues to be added there. You have a peer that is now looking at adding, in addition to adding capacity in Canada, maybe considering a new facility in Alabama. Your thoughts around OSB, maybe shift the more value add over commodity, maybe try to expedite the shift away from, or just in general, try to shift away or continue to shift away from OSB into signing. Any thoughts you have about OSB and the competitive dynamics there? Thank you.

Yeah, so obviously the competitive dynamics are playing out right now in a somewhat weaker housing market than we wish we had this time of year and this year. And as you mentioned, Mike, with the capacity that came on last year, that's certainly being felt in the market right now and is showing up in pricing. You know, I'm still bullish on OSB in the long run. As housing recovers, we're well positioned, given both our structural solutions and the bit of the commodity that we still manufacture, to be a very efficient supplier with a really wide network that's appealing to the national builders. And so, but we are at one of those times right now where the industry is having to absorb some new capacity at a time of relatively weak demand. And that leads to conservatism and distribution on taking in inventory because they can get prompt orders and prices have been falling. And so we're having to ride through that over the next little while, but I'm still like the OSB for the long OSB business that we have today for the long run. But as you mentioned, our focus is growing, exciting, converting facilities when we can and enjoying the stability that that brings to our business while also having the optionality on an OSB business that can generate a lot of cash and even a moderate market, but certainly in

the up market. Thank you for your question.

Our next question is from Stephen Ramsey with the Thompson Research Group. Your line is open.

Hi, good morning. I wanted to think about the order file a bit and how much of the success in your order file reflects marketing investments. If you think it reflects 2023 spending or more recently in 2024, just trying to gauge the success of that investment and the time lag from spend to bearing fruit.

Yeah, so listen, the investment we've made in repair and remodel, reciting emphasis that expert finish has brought to us has been a long spend. Really, you know, we started ramping up when we got off the allocation for COVID when we started to have, you know, extra capacity to sell. That investment has been strategic. It is ongoing and we are seeing the fruit of that in the expert finish order file and other products that get pulled along with that. That will be, you know, that's not a one-time slug of marketing and sales ads that you do and then you back away from. You know, to be successful in repair and remodel, you have to have a brand, you have to have a presence, and you have to be top of mind when it comes time for a resize project. And so I'm encouraged by the progress we've gotten off of that investment and we will continue to invest to drive growth there. You know, marketing, not so much a factor in new construction where it's more about, you know, working directly with the builders and the contractors to get the product trialed, but for the DIY and our sector, you know, that's investments that we're starting to see good returns off of. Let me add too that I think a key driver to the order file has also been our investment in product development and innovation. You know, what, six years ago we didn't have a pre-finished product and now we have naturals that have just been launched, you know, the next phase of that. And that's really opened up, you know, made the accessible market for us much, much bigger. And I'm really, really proud of the progress we've made there, the very innovative way we've approached the adaptability of our substrate to meet the needs of the homeowner or contractor. And, you know, if I want to look ahead, you know, I'm confident that as long as we continue to make these market advancements and become, you know, more of a known brand in the U.S. and also continue to develop the portfolio, there's a lot of headroom for continued growth with our smart side product line.

Okay, that's helpful color. And maybe this question builds on that topic that you were just discussing, Brad, which is the siding growth being so far above housing, the backdrop, at least more recently and longer term. I get that some of that is shed coming back, but with expert finish making up a larger portion of volume in sales, do you think the siding business decouples from starts when you think about the contrasting correlation? Maybe some of that depends on builder series success. So I'm curious, pulling up the siding outlook and how it compares to housing and your long term correlation and if it's changing.

It's a great question, Steve. And so look, you know, we, about two thirds of our, we estimate about two thirds of smart side doesn't go into new construction now. And so that you talk about shed, repair, remodel, home center business and other things. So that is certainly insulated from new construction, though, you know, there are some positive impacts new construction have on repair and remodel. But let's just keep it simple and say two thirds of it is not new home construction related. But I will say, I think certainly part of the strength in our order file, even though new home construction is down relative to where it was at COVID, as Alan mentioned, we're gaining market share in new home construction because of our builder series product innovation that we launched right after the COVID cycle. And that market share gained in new construction, it was kind of all upside for us because we were relatively weak there up to five years ago. So if you take the two thirds of our business that's not associated with new construction and the one third that is in the market share opportunities we have to gain there, you know, that's worked out really good for us in the first half of this year, those two things. So, you know, and I'm talked a little bit on the call already about repair and remodel and innovation, but I really see a lot of upside for us in new construction as well as our builder series product line gains credibility. We gain access to some new lumber yards and distribution opportunities, you know, we'll continue to grow there as well. And there's a lot of, we're still in the big picture have relatively low market share with a large national builders.

That's great, Tyler. Thank you.

Yep.

Thank you. Our next question is from Susan McClary with Goldman Sachs. Your line is open.

Thank you. Good morning, everyone. And thanks for taking the questions. I want to start on the siding side of things. Good morning. As you think about the next shift that you are seeing between sheds and then also some of the growth on the expert series side of things, any thought on how that mix will impact pricing this year? And I guess too, as you just think about the underlying, you know, factors that are coming through between tariffs and, you know, perhaps some upward pressure on raw materials, any thoughts there on prices? Well, and what we should be expecting over the next couple quarters in siding.

Susan, we, you know, we've implemented a price increase effective January 1. We got it, feel like it was fully implemented by February 1. So we probably have a, we have a little bit of just price uplift because of the price increase, you know, happening in Q2, which we certainly factored into the, into the guidance. And then, yeah, on the mix side, you know, as Alan mentioned, the strength in shed was a negative to pricing in Q1. We see that somewhat normalizing in Q2, but we could get an uptick, we're seeing an uptick on retail, home centers, which is also panel, so it can have a lower price impact. So, you know, all of that being equal, I think the expert finish improvement is kind of, it's going to be kind of continued to be offset by the strength on the panel side of our business. And Alan, I don't know if you want to add anything to that. I would like to

think that the Q2 year of year pricing will be a touch higher than Q1 with the net of all those factors that Brad outlined being slightly to the upside.

Okay, that's helpful. And then maybe shifting to OSB, you know, as you think about the builder's focus on affordability in this kind of an environment with rates holding higher, any thoughts on the implications that has for just one overall OSB demand, but then two, I think you noted in your commentary that you are seeing a shift from structural solutions to some of the commodity product. So, Susan, just any thoughts on the ability to better emphasize the value of structural solutions and the trends there over the coming quarters?

Susan, you've hit on it. The affordability issue right now is an overriding issue for the builders or top of mind issue, maybe not overriding, but top of mind issue. And that tends to, you know, be negative to our mix of structural solutions. We're still continuing to invest and to sell into that, but right now it's a tougher sell than it is in a market on OSB. So I would, while we're totally focused on that strategically and trying to drive structural solutions growth, we are facing a headwind when we're in a relatively down market in OSB with all this extra capacity that's come on this year. So we will hopefully see improvement in the second half, but I wouldn't be baking that in, you know, significantly to any forecasting that I was doing for the rest of this year.

Okay, thank you for all the color, guys, and good luck with everything.

Okay, thank you, Susan.

Thank

you.

Our next question comes from Sean Stewart with TD Cowan. Your line is open.

Thank you. Good morning. Just one question. We've seen a private competitor on the OSB side delay a conversion project for an OSB mill, and they are citing steel cost inflation and other inflation tied to tariffs as part of the rationale. I think last quarter you guys laid out the rationale for the Holton expansion being that citing prices were rising faster than capital costs were and returns were being preserved. I'm wondering if the thinking has evolved there at all on the return profile for that project, and can you give us some context on how much of the capital for that project is locked in at this point, how much you're exposed to potential inflation there?

Let me speak to this strategically. I mean, to me, Sean, it's a very different investment. We think of it as a very different investment decision between citing an OSB where, you know, we're generating demand, which, you know, per an earlier answer, sales and marketing spend ahead of to try to drive that demand, and we've also got stability of margins. And so the ability for us to continue to invest from a capital standpoint in citing is the highest priority we have in the company. And while, you know, the higher it costs to do one of these, the lower the return by definition, these projects and the Holton project in particular still has a nice return, you know, well above our cost of capital. And then I'll see if Alan, sorry about how much has already been locked in because I don't know that top of mind. Some of that has been.

But the majority is still, they're still effectively on it, still open. So, but I echo Brad's point. I think the message to take away from this that it would take a hell of a lot of change for us to lose our nerve on our, excuse me, on our siding, on accelerating capacity for us. My biggest fear is that no matter how fast we go, we'll be too late. Late, let's say not too late. That's somewhat terminal. We'll be late, later than I would want us to be. So it is full steam ahead.

Got it. That's useful context. Thanks very much, guys. That's all I have to know.

Thank you, Sean. Thanks, Sean.

Thank you. Our next question is from Mark Weintraub with Seaport Research Partners. Your line is open.

I think everything I was going to say is continuing to break. I'm just getting the attention of competitors to what is going on.

Mark, you're breaking up pretty badly. We can't understand. Sorry, Mark. We can hear you, but it's very badly distorted and broken up. Could I ask you to drop off the call, call back in, we'll put you back in the queue. Hopefully we'll have a better connection. I

will do that.

Can you hear me better now? No, it's the same. I'll drop off. Okay, we'll get you back. Operator, let's move on to the next one and then bring Mark back when he logs back in,

please. I'm sorry. We'll take a question now from Matthew McKellar with

RBC Capital Markets.

Good morning. Thanks for taking my questions. I think you mentioned the record quarter for expert finish. Please correct me if I had that wrong. Could you share any updated perspective on how margins and expert finish are trending relative to the rest of the siding business at this point?

I can. They still have a way to go. Again, if this business was at any kind of maturity, then that would be a concern to me, but given its growth rate, that's not a concern. You should take that as a positive sign for the future improvements in EBITDA margins, as in fact we raised the margin on expert finish. So, no, the expert finish pricing is great, but the margin is still a slight drag. As I've said before, I hope it doesn't sound too political, but I am very confident in LP's ability to ultimately bring those margins onto something close parity with the rest of the business on average. So, I'm happy to take that as a positive

sign for the future improvements in EBITDA margins, but I'm not sure if that's a good sign for the future improvements in EBITDA

margins. We are very pleased with the market share gains we've made over the last decade in all aspects of our siding business. We are confident in the product that we have is the best quality product on the market with very high value proposition, and we see no new risk associated with the transaction you're talking about. I mean, it's a competitive environment out there, and we're fighting it out every day, but we have a long runway for growth, except for the panel business. We're at low market share, both in repair and remodel and large builder new construction. So, we're focused on what we can execute and very confident we'll continue to have success across the board.

Thanks very much. I'll turn it back.

Thank you. We are now rejoined with Mark Weintraub from Seaport Research Partners.

Thanks. Can you hear me any better?

Much better. Sorry for the technical issues, Mark. However, I'm sure the line will go bad again if we get a difficult question.

Proceed again, Mark. That could happen, although it was actually the question that just got asked. No. That's not the case. I'm going to follow up on it. You had at one point talked about the possibility of adding another leg to your business as well. Per the last question, the belief of that competitor is that there is a synergy because decking customers and siding customers often are doing the renovation at the same time and that can be helpful. Do you have a perspective on that and are there things that could, is that something that's sort of in your short list to find other opportunities that maybe would be helpful to growing your siding business over time?

Let me just ask, I'm going to answer it specifically and then a little bit more generally. We haven't recognized the correlation between someone that wants to install a deck also wants to reside their house. That's not something in our discovery that we've run across. I want a more general answer to the question. Keep in mind, particularly as it pertains to new construction and retail, home centers, we have scale in our company. We have the second largest OSB manufacturer in the world and we have the most exciting offering of siding products in the world in our opinion as well. Which has something to do to this reorganization that we did where we believe bringing that power or we have discovered that bringing that power consciously to the market does drive success and helps us execute our strategy. We have the scale that maybe others are looking for to be a key presence in the markets that we play in. I'd rather be partnered with as a siding manufacturer, partnered with an OSB business than almost anything else that I could think of. When you talk about the third leg of the stool, that's not where we're focused from an M&A perspective. The deals that we look at and we're almost looking at something all the time at some scale, it's really about something that would complement directly our siding business and allow us to either grow that or our structural solutions business at a higher rate. That would be the things that would make sense for us.

Very helpful, Brad. Thank you. On the Section 232 investigations, everybody talks about it relative to lumber. Does that have any implications for OSB or siding depending on outcome?

I don't think so, no.

Okay, short and sweet. Thanks.

Thank you. Our next question comes from Jeffrey Stevenson with Lisp Capitals. Your line is open.

Hi, thanks for taking my questions today and congrats on the nice quarter. So I wanted to follow up as well on the potential merger of your largest siding competitor mentioned in prior questions. Do you think, Brad, there are potential near to midterm siding share gain opportunities on the margin due to complexities around the integration and channel partnerships of the combined company?

We are aggressively pursuing market share growth across the board. And so I don't know if that...I can't comment on how much this would help us with those market share gains, but we are relentless on getting them. And we'll take any help we can get. So, but I don't know specifically. We have not had a conversion to date because of the announcement, but I mean obviously we're being aggressive and we'll continue to be aggressive as we sell into this market.

Great. Now that makes sense. And then it's good to see the recovery and shed demand. And just wondered if you think this is more of a case right now of easy comparisons or do you believe it's a start of a sustainable recovery and then market demand?

No, I think it's always nice. It's nice 12 months later to have easy priors to compare against, but I do think it's a recovery. And you know, I just...we see this in softening markets for housing that the shed demand tends to go up as people...I'm making a very general statement, but the need for space. And so I'm not surprised given the overall macroeconomics right now of the U.S. economy to see shed coming back the way it has. And I do think for a while it will be sustainable. This isn't just an inventory play or anything like that. The order file is really strong across the board there.

Great. Thank you.

Welcome.

Thank you. Our next question is from Kurt Jinger from D.A. Davidson. Your line is open.

Great. Thanks and good morning, everyone. Just one question on going back to new residential market share. I think at this point, you know, the top 10 publics are about 40% of the new home market. You know, Brad, you kind of alluded to historically your share on the kind of new resi side has been, you know, largely dominated by the smaller builders. I guess, is there like a multi-year target you have in terms of kind of specifically penetrating that subset? I don't know if you want to stratify it as top 10 or top 50 or whatever, but I was hoping you could talk to that as well as, you know, in terms of converting that share. Is it something that you would expect to come in chunks or is it really a region by region battle and still, you know, show up in more of a smooth share gain fashion?

You know, it's chunkier than repair and remodel because repair and remodel is just a grind, you know, to get incremental share and it kind of comes steady but slow. Where with the larger builders, it is program related. So, you know, you either get some of the volume or you don't or you get half of what you asked for or you don't. And so it can be kind of chunky. But, you know, after you get past the top three or four or five big builders, it probably will manifest itself kind of smoothly because we'll be, you know, adding volume to the portfolio, you know, program by program. These programs run different time periods as far as one, two, three years. Some are signed at the middle of the year. Some are signed at the end of the year. And so, you know, I don't think we'll, and then by the way, once you sign them, you've got to ramp the market up to be able to service it. So it'll probably be, you know, from from y'all's perspective, there won't be any, you know, one quarter we come in and says, you know, we got a big new big builder there on here's all the volume from it and it's manifested this quarter. It will it will come as an overall growth to us. But it but internal to us, it does feel kind of chunky because it's it's you know, it's kind of a deal by deal. It's not kind of specifically a deal by deal thing. Sometimes even at the regional level. I don't know how helpful that answer was. It kind of all over the board. But that's that's how it feels to us. As far as setting goals, we do. You know, we have overall growth goals for that channel. I'm not going to mention that here. It's got this a little bit higher level detail than we like to give. But but we're leaning into that really, really hard. And we find opportunities for growth on a continual basis. And and you know, as I mentioned before, we don't win them all. But we're winning enough for it to make a difference in our order file and to make a difference in our results as we've reported here today. And I'm really encouraged by the continued progress that we have there. I'm really I'm really appreciative of our sales team that we've really worked to upgrade and to enable them with our with our innovation to be successful in that channel. And so and then I look at that that whole opportunity and just saying nothing but upside for us. So it's really encouraging to see the success there and to know that that there's a long runway for us to continue to be successful there. That's

great detail. And maybe one follow up, you know, if I look back at the 2020 investor day presentation, you talked about kind of low teen share in that new single family channel, I guess is, you know, that that's worked its way higher over the last couple years. I guess if we were to specifically look at, you know, that top heavy chunk of the market, is there, you know, a good way or maybe rule of thumb that you would have us think about kind of your market share, you know, with those large production builders at this stage?

Outside of the north, there's a lot of upside.

Fair enough. Thank you.

Thank you so much. I'm showing no further questions at this time. I would now like to turn it back to Aaron Howell for closing remarks.

Okay, thank you, operator. And thank you all for joining us this morning and for bearing with us during our technical difficulties as well. With no further questions, we'll end the call there. And we'll look forward to connecting again on the next call. Stay safe and we'll talk soon. Thank you.