Louisiana-Pacific CEO Discusses Q3 2010 Results - Earnings Call Transcript

Louisiana-Pacific Corporation (

LPX

)

Q3 2010 Earnings Call Transcript

November 8, 2010 11:00 am ET

Executives

Curt Stevens – EVP, Administration and CFO

Rick Frost – CEO

Analysts

Gail Glazerman – UBS

Chip Dillon – Credit Suisse

Ashish [ph] – CLSA

Peter Ruschmeier – Barclays Capital

Steve Chercover – D.A. Davidson

Mark Weintraub – Buckingham Research

Paul Quinn – RBC Capital Markets

Presentation

Operator

Compare to:
Previous Statements by LPX
» Louisiana-Pacific Corporation Q2 2010 Earnings Call Transcript
» Louisiana-Pacific Corporation Q1 2010 Earnings Call Transcript
» Louisiana-Pacific Corporation Q4 2009 Earnings Call Transcript
» Louisiana-Pacific Q3 2009 Earnings Call Transcript

Good day ladies and gentlemen and welcome to the third quarter 2010 Louisiana-Pacific Corporation earnings conference call. My name is Michelle, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for today, Mr. Curt Stevens, Executive Vice President of Administration and CFO. Please go ahead, sir.

Curt Stevens

Thank you, Michelle and thank all of you who are joining us on this conference call to discuss our financial results for last quarter. As Michelle said, I’m Curt Stevens, the CFO and with me today are Rick Frost, LP’s CEO, as well as Mike Kinney, and Becky Barckley, our primary Investor Relations contact.

As I usually do, I’ll begin the discussion with the review of the financial results for the quarter. This will be followed by some comments on the performance of the individual business segments and then, selective balance sheet items. After I finish my comments, Rick will take over to discuss the general market environment in which we operated last quarter’s perspective on the recent operating results, and some thoughts on the outlook for the last quarter of 2010 and looking into 2011.

As we have done in the past, we’ve opened up this call to the public and we are doing a webcast. The webcast can be accessed at our external Web site www.lpcorp.com. Additionally, to help with the discussion, we have provided a presentation that has supplemental information that should reviewed in conjunction with the earnings release. I will reference these slides as I go through my comments.

We also filed an 8-K this morning, with supplemental information that would be helpful as we discuss the earnings and we will file our Form 10-Q later this afternoon.

I’ll remind all the participants about the forward-looking statement comment that is included on slide two of the presentation. Please also be aware the discussion of our use of non-GAAP financial information which is included on slide #3.

The appendix attached has some of the necessary reconciliations and that was supplemented by the Form 8-K file that we made earlier this morning. I’m not going to re-read these statements, but I’m incorporating them with this reference.

Slide #4 of the presentation is the discussion of Q3 2010 results compared to the same quarter last year and the prior quarter. We’re reporting today a net loss for the third quarter of $32 million or $0.24 per diluted share.

Net sales from continuing operations were $323 million for the quarter. For the same period last year reported a net loss of $12 million or $0.12 per diluted share on sales from continuing operations of $311 million.

Adjusted EBITDA from continuing operations was a positive $4 million in the quarter compared to $11 million in Q3 of 2009. This is the third quarter in a row positive adjusted EBITDA, despite a housing market that hasn’t improved very much.

Slide #5 of the presentation is the discussion of the special charges in the quarter. The largest as we did record is $17 million other than temporary impairment associated with the anticipated sale of an equity investment of joint venture. What this adjustment did is reduced the carrying value to the estimated sales price.

The other charges in the quarter were largely related to the settlement of the final opt-out associated with the OSB Antitrust Settlement. After we adjust for these, the adjusted loss from operations would be $0.09 per diluted share.

Slide #6 of the presentation is the discussion of year-to-date results compared to the same period last year. Year-to-date we are reporting a net loss of $32 million on net sales of $1.1 billion. Interestingly, at the end of Q3 we had already surpassed the sales levels for the full year of 2009. For the same period last year reported net loss is $72 million on sales of $783 million.

Adjusted EBITDA from continuing operations for year-to-date was a positive $81 million compared to a $25 million loss for the first nine months of last year.

The tax rate on continuing operations for the first nine months was 32% as compared to 40% in the prior year. For 2010, the difference between the 32% and the statutory rate is primarily due to the impact of foreign source income, FX income on certain intercompany loans and an offset due to the non-deductibility of the other than temporary impairment that we took on our equity investments.

Before discussing the performance of each of our segment, let me just take a few minutes to explain at a high level why earnings were down slightly though sales are up modestly. On the sales side, OSB pricing accounted for about $10 million improvement. However, in the cost side, we did have an increase in the per unit cost for raw materials that accounted for a reduction in earnings of about $6 million. The weakening U.S. dollar negatively affected our profits in our Canadian operations by about $3 million.

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