Good day and 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 speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] 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, 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 Haughie, 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 2 and 3 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 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 volatility and disruption in the U.S. 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 siding business continues to grow, expand margins, gain share and realized higher prices. We also introduced new and more specialized products in the quarter that will add energy to the growth flywheel. While we are watching the macro backdrop closely, we see no signs of a slowdown in siding. 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 siding, as Alan 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 siding offset lower OSB prices. EBITDA was down $20 million. To oversimplified bid, 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…

Thanks, Brad. Pages 8 and 9 of the presentation show the first quarter year-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. LP’s 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 ExpertFinish. In other words, please don’t infer any slowdown in ExpertFinish from the softer year-over-year price growth. On the contrary, the first quarter set records for both volume and revenue in ExpertFinish. Other variances in the quarter were minor, with a $5 million increasing 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…

Thank you. At this time, there will be a Q&A session [Operator Instructions] Our first question today is from Ketan Mamtora with BMO Capital Markets. Your line is open.

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

Ketan, I’d be glad to answer that. Thank you. Really, we have seen strength in 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 were – 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 export 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 Alan mentioned, with the panel sales.

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

Yes. Well, first of all, on 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 centers was good, though our intake of orders in Q1 wasn’t. So there was inventory pull down at the home center. So now I would call those normal. And then in the channel, it’s seasonally where it needs to be given the fact that spring is breaking across the country. So I mean, 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 in Siding. So there’s not – 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 the Siding and I’ll go ahead and answer to on the OSB side. It might – 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 helpful. I jump back into queue.

Thank you, Ketan.

Thank you. Our next question is from Michael Roxland with Truist Securities. Your line is open.

Yes. Thank you, Brad, Alan and Aaron to taking my questions and I’ll echo Ketan’s two comments, congrats on a very good quarter despite the backdrop.

Sure. Thanks, Mike.

Just want to just – 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 2026, particularly as you’re expanding Houlton pursue a second investment your guidance also seems to imply some margin weakness relative to 1H. And I could just be on conservatism or cautiousness, I get that. But shouldn’t side margins as you convert Houlton can trend down? And if so, when do you expect that business to take place?

Yes. Well, I’ll start with the question about the second half. Yes, speaking frankly, we always have produce 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 sort of 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 saw from tout as the – let’s call it the reason for what has seen as margin conservatism. So there’s no – I would say I take the over on the second half versus the under, particularly given the non-materialization of my inflationary fears and the way the auto file is progressing. But in 2027, next year – what is next year, 2026, sorry. I left over 2026. Yes, we – all other things being equal, we should see some margin expansion in 2026 because there will be no material impacts on the profit side from the investments in the new capacity. They won’t be hitting until at least 2027.

Got it. I appreciate that, and thank you. And then just one quick follow-up on OSB. Obviously, capacity continues to be added there. You have here 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 more value-add over commodity, maybe trying to expedite the shift away from or just in general try to shift away or continue to shift away from OSB into Siding. Any thoughts you have about OSB and the competitive dynamics there? Thank you.

Yes. So obviously, the competitive dynamics are playing out right now in a somewhat weaker housing market than we wish we had at this time of year in 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 it’s showing up in pricing. I’m still bullish on OSB in the long run if we – 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 – 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 – OSB business that we have today for the long run. But as you mentioned, our focus is growing siding, 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 in even a moderate market, but certainly in the up market.

Thank you for your question. Our next question is from Steven Ramsey with the Thompson Research Group. Your line is open.

Hi, good morning. 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.

Yes. So, listen, the investment we’ve made in repair and remodel residing emphasis that expert finish has brought to us has been a long spend really. We started ramping up when we got off allocation for COVID when we started to have 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 – that’s not a one-time slug of marketing and sales ads that you do and then you back away from. 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 reside 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. Marketing, not so much a factor in new construction where it’s more about working directly with the builders and the contractors to get the product trialed. But for the DIY and R&R sector that’s investments that we’re starting to see good returns off of. Let me add to that I think a key driver to the order file has also been our investment in product development and innovation. What – six years ago, we didn’t have a pre-finished product, now we have naturals that just been launched the next phase of that. That’s really opened up, made the accessible market for us much, much bigger. And I’m 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 when I look ahead, I’m confident that as long as we continue to make these market advancements and become 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 SmartSide 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 sheds coming back. But with expert finish making up a larger portion of volume and 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, about two-thirds of our – we estimate about two-thirds of SmartSide 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, 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 gain 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 and the market share opportunities we have to gain there that’s worked out really good for us in the first half of this year, those two things. And I’m talking 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 through some new lumber yards and distribution opportunities, 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 color. Thank you.

Yes.

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

Thank you. Good morning everyone and thanks for taking the questions. I wanted to start on the siding side of things.

Good morning, Susan.

Good morning. As you think about the mix 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 factors that are coming through between tariffs and perhaps some upward pressure on raw materials. Any thoughts there on price as well and what we should be expecting over the next couple quarters in siding?

Well, Susan, we’ve implemented a price increase effective January 1. We got it – we feel like it was fully implemented by February 1, so we probably have – we have a little bit of just price uplift because of the price increase happening in Q2, which we certainly factored into the guidance. And then, yes, on the mix side, 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 – we’re seeing an uptick on retail, home centers, which is also panel, so it can have a lower price impact. So all of that being equal, I think the expert finish improvement is kind of – is going to be kind of continue 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?

All right. I would like to think that the Q2 year-over-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. As you think about the builders 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. Just any thoughts on the ability to that are emphasized 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 from the builders, or top of mind issue, maybe not overriding, but top of mind issue. And that tends to 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 sale than it is in a market on OSB. So I would – 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 if – but I wouldn’t be baking that in 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.

Thank you, Susan.

Our next question comes from Sean Steuart with TD Cowen. 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 Houlton expansion being that Siding 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, it’s to me, Sean, is very different investment – we think of it as a very different investment decision between Siding and OSB, where we’re generating demand, which for an earlier answer, sales and marketing spend ahead of to try to drive that demand. And we’ve got – also got stability of margins. So the ability for us to continuing to invest from a capital standpoint in Siding is the profile, the highest priority we have in the company. And while the higher cost to do one of these, to lower the return by definition, these projects and the Houlton project, in particular, still has a nice return, well above our cost of capital. And then I’ll see if Alan, about how much has already been locked in because I don’t know that top of mind – some of that.

Some of that has not, but the majority is still effectively is 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 first to lose on nerve [ph] excuse me, on Siding on accelerating capacity for us. My biggest fear is that no matter how fast we go will be too late, late, let’s say, not too late. That’s somewhat minimal. We’ll be later than I would want us to be. So it is full steam ahead.

Got it. That see so context. Thanks very much guys. That’s all I have for now.

Thanks, Sean.

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

[Technical Difficulty]

Mark, you’re breaking up pretty badly. We can’t understand it. Sorry, Mark. We can hear you, but it’s very badly distorted and broken up. Let’s – 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.

Can you hear me better now.

No, it’s the same. 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.

We’ll take a question now from Matthew McKellar with RBC Capital Markets.

Hi good morning. Thanks for taking my questions. I think you mentioned a record quarter for ExpertFinish. Please correct me if I heard that wrong. Could you maybe share any updated perspective on how margins in ExpertFinish 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 sense – any kind of maturity, then that would be a concern to me, but given its growth rate, that’s not a concern. But – and you should take that as a positive sign for the future improvements in EBITDA margins as in fact, we raised the margin on ExpertFinish. So no, the ExpertFinish finished pricing is great, but the margin is still a slight drag. And as I’ve said before, it’s probably doesn’t sound too political, but I’m very confident in LP’s ability to ultimately bring those margins on to something close to parity with the rest of the business on average, but coming yes, they’re below, which is an opportunity.

Great. Thanks for that. And last for me, one of your Siding competitors announced a deal with the composite decking manufacturer. Do you think this transaction affects the competitive landscaping – excuse me, competitive landscape in Siding at all as the companies come together? And is there any kind of response you may be contemplating to this development?

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 a very high value proposition, and we see no 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 – excuse me, 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 got a difficult question.

That could happen, although it was actually the question that just got asked. So I’m…

Okay.

That’s not the case. And I’m going to follow up on it, which is you had, at one point, talked about the possibility of adding another leg to your business as well. And I mean per the last question, the belief of that competitor is that there is a synergy because decking customers and siding customers often or doing it at the – doing the renovation at the same time and that, that can be helpful. Do you have a perspective on that? And are there things that could – is that something that sort of in your short list to find other opportunities that maybe would be helpful to growing your Siding business over time?

So let me just – I’m going to answer it specifically and then a little bit more generally. So we haven’t focused on the fact we haven’t recognized the correlation between someone that won’t install a deck also wants to reside their house. So that’s not something in our discovery that we’ve run across. On a more general answer the question. Keep in mind, as – 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. And so which has something to do to this reorganization that we did where we believe bringing that power – or we have discovered bringing that power consciously to the market does drive success and help us execute our strategy. So we have the scale that maybe others are looking for to be a key presence in the markets that we play in. So I’d rather be partnered with as a siding manufacturer partner with an OSB business than almost anything else that I could think of. So when you talk about the third leg of the stool, that’s not where we’re focused from an M&A perspective. We – the deals that we look at and we’re looking 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. And just on the Section 232 investigation, with that – everybody talks about it relative to lumber. Do you know 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 Loop Capital. Your line is open.

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

We will – 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 in end market demand?

No, I think it’s – it’s always nice – it’s nice to 12 months later to have easy priors to compare against, but I do think it’s a recovery. And I just – we see this in softening markets for housing, the shed demand tends to go up as people, and 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.

You’re welcome.

Thank you. Our next question is from Kurt Yinger 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; the Top 10 publics are about 40% of the new home market. Brad, you kind of alluded to. Historically, your share on the kind of new resi side has been largely dominated by the smaller builders. I guess, is there like a multiyear 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 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 show up in more of a smooth share gain fashion?

It’s chunkier than repair and remodel because repair and remodel is just a grind to get incremental share. And it kind of comes steady but slow where with the larger builders, it is program related. So 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 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 adding volume to the portfolio program by program. These programs run different time periods as far as one, two, three years. There – some are signed in the middle of the year, some are signed at the end of the year. And so I don’t think – 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 will probably be – from Yale’s [ph] perspective, there won’t be any one quarter, we come in and say, we got a big, big builder here, and here’s all the volume from it, and it’s manifested this quarter. It will come as an overall growth to us. But internal to us, it does feel kind of chunky because it’s kind of a deal by – it’s not kind, it’s 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 how it feels to us. As far as setting goals, 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 of detail than we like to give. But we’re leaning into that really, really hard. And we find opportunities for growth on a continual basis. And as I’ve 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 appreciative of our sales team that we’ve really worked to upgrade and to enable them with our innovation to be successful in that channel. And so – and then I look at that whole opportunity and just see 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.

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

Outside Lenor, 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 Howald 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 look forward to connecting again on the next call. Stay safe, and we’ll talk soon. Thank you.