Louisiana-Pacific Corporation Q2 2010 Earnings Call Transcript

Louisiana-Pacific Corporation Q2 2010 Earnings Call Transcript
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Louisiana-Pacific Corporation (LPX)

Q2 2010 Earnings Call

July 30, 2010 1:00 pm ET

Executives

Curtis Stevens – EVP, Administration and CFO

Richard Frost – CEO

Mike Kinney – Primary Investor Relations Contact

Becky Barkley – Primary Investor Relations Contact

Analysts

Mark Weintraub – Buckingham Research

Chip Dillon – Credit Suisse

Mark Connelly – CLSA

Steve Chercover – D.A. Davidson

Peter Ruschmeier – Barclays Capital

Presentation

Operator

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Previous Statements by LPX
» Louisiana-Pacific Corporation Q1 2010 Earnings Call Transcript
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Good day Ladies and Gentlemen. And welcome to the Second Quarter 2010 Louisiana-Pacific Corp. Earnings Conference Call. My name is Santali, and I will be your facilitator for today’s call. (Operator Instructions)

I would now like to turn the presentation over to your host for today’s call, Mr. Curt Stevens, Executive Vice President of Administration and CFO. Please precede Sir.

Curtis Stevens

Thank you very much. And thank all of you for joining us on this conference call this afternoon. I know it’s a little odd for us to have a Friday afternoon conference call, but we appreciate your indulgence.

As the operator said, I am Curt Stevens, the CFO. And with me today is Rick Frost, our CEO, as well as Mike Kinney and Becky Barkley who are primary investor relations contacts.

As I usually do, I will begin the discussion with a review of the financial results for the second quarter. I’ll follow that with some comments on the performance of our individual segment and talk a bit about the balance sheet.

While I’d like to spend a lot of time talking about Q2 because it was such a good quarter for us, I suspect that what many of you are wondering about is where the market will go next.

To that end, after I finish my comments, I’ll turn you over to Rick Frost who will give you his weather update for Nashville, discuss the general market environment in which we’re operating, and his perspective of both the most recent quarter and his thoughts for the rest of this year.

As we’ve done in the past, we have opened up the call to the public and are doing a webcast. You may access that at our website

www.lpcorp.com

.

Additionally, to help with the discussion, we have provided a presentation that has supplemental information that should be reviewed in conjunction with the earning’s release. And I will be referencing that document as I go though my comments.

This morning we did file an 8K that had supplemental information. And we intend to file our Form 10Q later this afternoon.

I want to remind all the participants about the forward-looking statements comment that is included on slide two of the presentation.

Also be aware on slide three that we will be discussing some non-GAAP financial information. And the necessary appendix for this is in the back of the presentation, as well as in the supplemental material that we filed with the Form 8K this morning. I’m not going to reread these statements, but I will incorporate them with this reference.

Direct your attention to slide four of the presentation for a discussion of the overall Q2 results compared to the same quarter last year and the prior quarter.

Today we’re reporting net income for the second quarter of $22 million, or $0.16 per diluted share. Net sales from continuing operations were $447 million for the quarter. That’s an increase of nearly 2/3 compared to the second quarter of 2009.

The same period last year, we reported a net loss of $29 million, or $0.28 per diluted share on sales for continuing operations of $267 million.

Adjusted EBITDA in continuing operations was a positive 75 million in the quarter compared to a loss of 11 million in Q2 in 2009.

Very small movement in the tax rate between the two quarters; Q2 of 2010 was 35%. And last year the same quarter was 37%.

On the earnings per share calculation, I would have you note that the basic average shares outstanding used in Q2 of 2010 is 25% higher than the same quarter last year. And the diluted average shares outstanding is 36% higher. This reflects the issuance of the shares in September of 2009 when we did the claw back equity offering, and the warrants that were attached to the 2017 subordinated notes.

In addition, as this was a profitable quarter, it takes into consideration the in-the-money invested options and stock-settled appreciation rights.

Slide five of the presentation is a discussion of our year-to-date results compared to last year. For the year, we’re reporting basically, break-even net sales from continuing operations were 744 million, 57% higher than the first half of 2009. For the same period last year, we reported a next loss on sales of 473 million.

Adjusted EBITDA for the six months of $78 million this year compared to a loss of 36 million the prior year.

The tax rate in continuing operations looks a little funny here; as the company is close to break even, the discreet tax items have a much more meaningful impact on the rate. So while it looks odd at 69%, it is based on very low, or very near break-even performance.

Let me now talk about each one of our segments.

Slide six is an overview of our OSB segment. OSB had operating income of $48 million in the quarter compared to an operating loss of $18 million in the same quarter last year.

For the quarter, sales increased by more than double on a 24% increase in volume, and an average sales price that was 78% higher than the same quarter last year. Obviously the increase in sales price created most of the improvement in earnings and adjusted EBITDA.

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