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Louisiana-Pacific Corporation

Louisiana-Pacific Corporation recently reported its 1Q2020 earnings. The quarterly Louisiana-Pacific revenue was $585 million, a rise of 0.5% Y-o-Y.  However, earnings per share jumped by a whopping 161.5%, going from 13 cents per share in Q12019 to 34 cents per share in Q12020. The growth was driven by strong performances in the Oriented Strand Board (OSB) and Engineered Wood Products (EWP) segments.

While market conditions have deteriorated materially since March 2020, Louisiana-Pacific has taken steps to get through the downturn. Brad Souther, CEO, Louisiana-Pacific Corporation said, “We have no principal payments on our long-term debt due before 2024. I am confident in our balance sheet. The Siding and OSB segments are adjusting their operating levels to balance supply and demand and optimize working capital.”

He further added, “To further preserve cash, we have reduced our spending on capital projects and suspended share buybacks. We announced at the end of March that we were reducing our planned capital expenditures by 50% to $70 million.”

The situation isn’t quite as bad as the time when The Louisiana Pacific siding lawsuit dominated headlines back in 1995-1996. The company paid out more than 37,000 claims in what was, at the time, the largest class-action lawsuit in the siding industry.

A few days after the earnings call, the company’s independent director, Stephen Macadam, bought $105,000 worth of LPX stock at $20.96 a share. Such an increase in holdings by insiders can signal an alignment between the insiders and other shareholders, or maybe something optimistic about future prospects.

The Louisiana-Pacific stock closed at $23.10 on May 22, up 15.50% for the month. The S&P500 is up 1.48% for the month.

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