Q4 2024 Louisiana-Pacific Corp Earnings Call

February 19, 2025

Pencil are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question you will need to press star one on your telephone you will then hear an automated message advised them that your hand is raised to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Aaron whole wall, Vice President of Investor Relations.

You have to ask a question you will need to press star one on your telephone you.

Speaker Change: We'll then hear an automated message advised them that your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Aaron whole wall Vice President of Investor Relations. Please go ahead.

Speaker Change: Please go ahead.

Aaron Holwell: Thank you operator, and good morning, everyone.

Aaron Holwall: Thank you operator, and good morning, everyone. Thank you for joining us to discuss Lp's results for the fourth quarter of 2024 as well as our full year results and our outlook for Q1 and 2025.

Aaron Holwell: Thank you for joining us to discuss Lp's results for the fourth quarter of 2024 as well as our full year results and our outlook for Q1 and 2025.

Speaker Change: The call with me. This morning are Brad Southern Lp's, Chief Executive Officer, and Allen Hockey Lp's, Chief Financial Officer.

Speaker Change: Hosting the call with me. This morning are Brad Southern Lp's, Chief Executive Officer, and Allen Hockey Lp's, Chief Financial Officer. After prepared remarks, we will take a round of questions.

Aaron Holwell: After prepared remarks, we will take a round of questions.

Aaron Holwell: During this mornings call we will refer to a presentation that has been posted to Lp's IR webpage, which is Investor LP Corp Dot com.

Speaker Change: During this mornings call we will refer to a presentation that has been posted to Lp's IR webpage, which is investor LP corporate Dot com.

Aaron Holwell: Our 8-K filing earnings press release and other materials are also available there.

Speaker Change: Our 8-K filing earnings press release and other materials are also available there.

Aaron Holwell: 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 also contains reconciliations that are further supplemented by this morning's 8-K filing rather than reading those materials I will incorporate them by reference and with that over to Brad.

Speaker Change: 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 also contains reconciliations that are further supplemented by this morning's 8-K filing rather than reading those materials I will incorporate them by reference and with that over to Brad.

Brad: Thanks, Erin and thank you again for joining us today.

Brad Southern: Thanks, Erin and thank you again for joining us today.

Brad: Q4 was a strong finish to a record year for siding feature growth share gains and margin expansion in.

Q4 was a strong finish to a record year for siding that feature growth share gains and margin expansion in.

Brad: In 2024, citing set records for net sales and EBITDA overall.

Brad Southern: In 2020 for siding set records for net sales and EBITDA overall.

Brad: As well as multiple records for export finish.

Brad Southern: As well as multiple records for export finish.

Brad: In OSP, we saw slightly higher market prices than in 2023, but more importantly, the business executed our strategy effectively.

Brad Southern: In OSP, we saw slightly higher market prices than in 2023, but more importantly, the business executed our strategy effectively.

Brad: Structural solutions increased operating efficiency and manage capacity with agility and discipline.

Brad Southern: Structural solutions increased operating efficiency and manage capacity with agility and discipline.

Brad: Page five of the presentation shows financial highlights for the fourth quarter and full year and.

Page five of the presentation shows financial highlights for the fourth quarter and full year and.

Brad: In Q4, we saw the expected seasonal slowdown as winter weather brought the building season to a close.

Brad Southern: In Q4, we saw the expected seasonal slowdown as winter weather brought the building season to a close.

Brad: Compared to the prior year siding sales grew by 9% in the quarter for LP as a whole the net effect of siding growth by decline in OSB prices and an increase in OSB sales volumes resulted in $681 billion in sales $125 million in EBITDA and $105 million in operating cash.

Brad Southern: Compared to the prior year siding sales grew by 9% in the quarter for <unk> as a whole the net effect of siding growth by decline in OSB prices and an increase in OSB sales volumes resulted in $681 billion in sales $125 million in EBITDA and $105 million in operating cash.

Brad: Flow <unk>.

Brad Southern: Flow <unk>.

Brad: After investing 61 billion and sustaining maintenance and growth capital LP returned $42 million to shareholders through dividends and share repurchases.

Brad Southern: After investing $61 million in sustaining maintenance and growth capital LP returned $42 million to shareholders through dividends and share repurchases.

Brad: For the full year siding sales grew by 17% to 156 billion.

Brad Southern: For the full year siding sales grew by 17% to 156 billion.

Brad: Thanks, deciding growth slightly higher OSB prices and the margin expansion driven by increased capacity utilization and operating efficiency, we achieved $2 $9 billion in sales and $688 million in EBITDA.

Brad Southern: Thanks, deciding growth slightly higher OSB prices and the margin expansion driven by increased capacity utilization and operating efficiency, we achieved $2 $9 billion in sales and $688 million in EBITDA.

Brad: These represent increases of 14 and 44% respectively.

Brad Southern: These represent increases of 14 and 44% respectively.

Brad: This nearly doubled earnings per share to $5 88.

Brad Southern: This nearly doubled earnings per share to $5 88.

Brad: L P used to $605 million in operating cash flow to continue executing our capital allocation strategy by investing $183 million in capex, and returning $286 million to shareholders via dividends and share repurchases.

Brad Southern: L P used to $605 million in operating cash flow to continue executing our capital allocation strategy by investing $183 million in capex, and returning $286 million to shareholders via dividends and share repurchases.

Brad: Most importantly, we accomplished this safely ending the year with 0.67 total incident rate. This is considered a world class <unk>, but it's not good enough for LP.

Brad Southern: Most importantly, we accomplished this safely ending the year with 0.67 total incident rate. This is considered a world class <unk>, but it's not good enough for LP.

Brad: We'll never stop working to improve our safety performance to ensure no one gets injured while working at El P.

Brad Southern: We'll never stop working to improve our safety performance to ensure no one gets injured while working at LP.

Brad: As we look forward to 2025, the market is not radically different to what it was a year ago. When our call. This time last year, we said that we expected 2024 to be a flat year for housing and a soft year for R&R, but we expected both businesses to outperform both markets. This is exactly what happened.

Brad Southern: As we look forward to 2025, the market is not radically different to what it was a year ago on our call. This time last year, we said that we expected 2024 to be a flat year for housing and a soft year for R&R, but we expect both businesses to outperform both markets. This is exactly what happened.

Brad: In 2024.

Brad Southern: In 2024.

Brad: Total U S housing starts were down 4% for the year and 6% in the fourth quarter.

Brad Southern: Total U S housing starts were down 4% for the year and 6% in the fourth quarter.

Brad: LP is over index to single family housing, which fared better, especially in the first half of the year.

Brad Southern: <unk> has over index to single family housing, which fared better, especially in the first half of the year signaled.

Single family starts were up 7% for the full year, but down 5% in the fourth quarter.

Brad Southern: Single family starts were up 7% for the full year, but down 5% in the fourth quarter.

Brad: It is hard to be precise about the repair and remodeling market, but we estimate the total U S. R&R expenditures were down low to mid single digits.

Brad Southern: It is hard to be precise about the repair and remodeling market, but we estimate that total U S. R&R expenditures were down low to mid single digits.

Brad: Against this backdrop <unk> revenue grew by 9% in Q4 and 17% for the full year we.

Brad Southern: Against this backdrop <unk> revenue grew by 9% in Q4 and 17% for the full year we.

Brad: We saw the resumption of normal seasonal demand patterns in siding as well as broad based growth in all product categories and in all geographies we serve.

Brad Southern: We saw the resumption of normal seasonal demand patterns in siding as well as broad based growth in all product categories and in all geographies we serve.

Brad: This growth is driven by new product innovation, our demand creation efforts LP superior product offerings and by our amazing teams that make it all happen.

Brad Southern: This growth is driven by new product innovation, our demand creation efforts LP superior product offerings and by our amazing teams that make it all happen.

Brad: Volume growth enabled more margin expansion for siding as we more fully utilized our new capacity at El peaks, Houlton, So golar and <unk> facilities.

Volume growth enabled more margin expansion for siding as we more fully utilized our new capacity at El peaks, Houlton, So golar and bass facilities.

As a result of this growth, citing achieved our long term EBITDA margin target of 25% for the full year, despite a soft market.

Brad Southern: As a result of this growth, citing achieved our long term EBITDA margin target of 25% for the full year, despite a soft market.

Brad: And OSB. Despite housing starts below long term average demand the business achieved EBITDA above our long term cycle average, thanks to efficient cost control and disciplined capacity management.

Brad Southern: And OSB. Despite housing starts below long term average demand the business achieved EBITDA above our long term cycle average, thanks to efficient cost control and disciplined capacity management.

Brad: The consensus expectation for housing starts in 2025 is looking like another flat year with perhaps a modest rebound in R&R spending.

Brad Southern: The consensus expectation for housing starts in 2025 is looking like another flat year with perhaps a modest rebound in R&R spending.

Brad: Accordingly in OSB LP is planning for another year of operational excellence cost control and strategic execution.

Brad Southern: Accordingly in OSB LP is planning for another year of operational excellence cost control and strategic execution.

Brad: Citing the focus is on share gains and volume growth.

Brad Southern: Citing the focus is on share gains and volume growth.

Brad: We're seeing encouraging evidence of that growth so far in 2025 with a healthy citing order file that we will detail in our guidance discussion.

Brad Southern: We're seeing encouraging evidence of that growth so far in 2025 with a healthy citing order file that we will detail in our guidance discussion.

Brad: Accordingly, we are increasing our investments in new product innovation demand creation and capacity expansion to meet our customers' needs.

Brad Southern: Accordingly, we are increasing our investments in new product innovation demand creation and capacity expansion to meet our customers' needs.

Brad: 2024 was a relatively light year for capital investments. The recent conversions of our solar and Houlton mills and the opening of our pre finishing facility in Bath gave us room to grow in siding as demand continues to increase we want to ensure that we do not outgrow our siding capacity that means that 2025.

Brad Southern: 2024 was a relatively light year for capital investments. The recent conversions of our solar and Houlton mills and the opening of our pre finishing facility in Bath gave us room to grow in siding as demand continues to increase we want to ensure that we do not outgrow our siding capacity that means that 2025.

Brad: And 2026, we'll see significantly increased investments in capacity expansion starting later this year.

Brad Southern: And 2026, we'll see significantly increased investments in capacity expansion starting later this year.

Brad: The next projects will include a second manufacturing line at LP Holton, starting the next siding expansion project after that and increasing capacity at our existing export finished pre finishing facilities with a significant portion of this work happening in parallel.

The next projects will include a second manufacturing line at LP Holton.

Brad Southern: <unk>. The next siding expansion project after bat and increasing capacity at our existing export finished pre finishing facilities with a significant portion of this work happening in parallel.

Brad: Our historic volume growth rate of about 7% per year at a much higher growth rate for export finished prefinished siding. These projects should be completed in time to keep citing capacity utilization with inefficient balance.

Brad Southern: At our historic volume growth rate of about 7% per year and our much higher growth rate for export finished prefinished siding. These projects should be completed in time to keep siding capacity utilization with inefficient bounds.

Brad: We would much rather be a little early than late with new capacity and so we are starting now to preserve our ability to grow rather than risking an extended period of allocation like we saw during COVID-19.

Brad Southern: We would much rather be a little early than late with new capacity and so we're starting now to preserve our ability to grow rather than risking an extended period of allocation like we saw during COVID-19.

Brad: As Alan will detail in a few minutes, we expect the siding business to generate over $400 million of EBITDA. This year reinforcing our confidence that <unk> can comfortably fund its own growth.

Brad Southern: As Alan will detail in a few minutes, we expect the siding business to generate over $400 million of EBITDA. This year reinforcing our confidence that <unk> can comfortably fund its own growth.

Brad: The <unk> team is fully committed to executing our growth strategy.

Brad Southern: The <unk> team is fully committed to executing our growth strategy.

Brad: I am confident that we will continue to innovate new products gain market share operate safely and increase the scale and efficiency of our manufacturing network.

Brad Southern: I'm confident that we will continue to innovate new products gain market share and operate safely and increase the scale and efficiency of our manufacturing network.

Brad: With that I will turn the call over to Alan to detail. These investments the financial results and our 2025 outlook after which we will take your questions.

Brad Southern: With that I will turn the call over to Alan to detail. These investments the financial results and our 2025 outlook after which we will take your questions.

Alan: Thanks, Brad.

Speaker Change: As Brent said, the fourth quarter brought the year to a strong finish and as I'll explore in a few minutes. This first quarter of 2025 also seems to be shaping up well.

Alan: As Brad said, the fourth quarter brought the year to a strong finish and as I'll explore in a few minutes. This first quarter of 2025 also seems to be shaping up well page.

Alan: Seven shows the fourth quarter waterfall for siding.

Alan: Page seven shows the fourth quarter waterfall for siding.

Alan: 2024, largely exhibited normal seasonal demand patterns with a sequential drop in volumes in the fourth quarter as building activity faded.

Alan: Single family starts were down not just seasonally but also by five points year over year. Despite this siding volumes grew by 3%, beating single family starts by eight points.

Alan: Higher selling prices added another six points of revenue growth with roughly half coming from list price increases the half from mix and we largely reinvested these earnings and selling and marketing and in mill staffing with the expectation that 2025 demand will require higher production.

Alan: Higher selling prices added another six points of revenue growth with roughly half coming from list price increases and half from mix.

Alan: When we launched we reinvested these earnings and selling and marketing and in mill staffing with the expectation that 2025 demand will require higher production.

Speaker Change: For the full year on page eight, citing revenue grew by 17 points outgrowing the underlying markets as Brad said.

Alan: For the full year on page eight exciting revenue grew by 17 points outgrowing the underlying markets as Brad said.

Speaker Change: This growth added $230 million in revenue $79 million of it from price isn't a $151 million from volume.

Alan: This growth added $230 million in revenue $79 million of it from price isn't a $151 million from volume.

Speaker Change: <unk> added $143 million in EBITDA.

Alan: <unk> added $143 million in EBITDA.

Speaker Change: Seeing the flow through of $79 million in price with $64 million coming from volume.

Alan: Being the flow through of $79 million in price with $64 million coming from volume.

Speaker Change: Increased investments in demand creation and mill staffing, partially offset by a $60 million benefit from raw material price deflation both.

Alan: Increased investments in demand creation to mill staffing, partially offset by a $60 million benefit from raw material price deflation.

Speaker Change: Both 2024 to a close with a 25% EBITDA margin 500 basis points higher than last year 2023.

Alan: 2024 to a close with a 25% EBITDA margin 500 basis points higher than last year.

Tony: Tony here.

Speaker Change: We sold just over $1 7 billion square feet of siding in 2024, which is about 75% of our nameplate capacity.

Tony: We sold just over $1 7 billion square feet of siding in 2024, which is about 75% of our nameplate capacity.

Speaker Change: So we have a healthy runway of capacity to grow into while we execute new expansion projects.

Tony: So we have a healthy runway of capacity to grow into while we execute new expansion projects.

Speaker Change: For OSP on page nine lower prices in the fourth quarter across the segment about $18 million in both the revenue and EBITDA.

Tony: For OSB on page nine the lower prices in the fourth quarter cost of segment about $18 million in both the revenue and EBITDA.

Speaker Change: However by effectively managing what we can control the business recovered most of the revenue impact and half of the EBITDA impact of these lower prices through the combined effects of higher volumes improved OE and deficient raw material utilization.

Tony: However by effectively managing what we can control the business recovered most of the revenue impact and half of the EBITDA impact of these lower prices through the combined effects of higher volumes improved OE and deficient raw material utilization.

Speaker Change: Page 10 shows the full year, if OSB on average prices were slightly higher year over year with a $35 million in pricing benefit was overshadowed somewhat by the $106 million in revenue and $55 million in EBITDA from higher commodity and structural solutions volumes helped of course by a <unk>.

Tony: Okay.

Tony: Page 10 shows the full year, if OSB on average prices were slightly higher year over year with a $35 million in pricing benefit was overshadowed somewhat by the $106 million in revenue and $55 million in EBITDA, some higher commodity and structural solutions volumes helped of course by a three percentage point improve.

Speaker Change: Three percentage point improvement in OE, which in essence means that when we ran we did sell more efficiently.

Tony: <unk> and <unk>, which in essence means that when we ran we did sell more efficiently.

Speaker Change: Raw material deflation labor inflation, and a hodgepodge of other small items left the year at just under $1 $2 billion in net sales and $298 million in EBITDA.

Tony: Raw material deflation labor inflation, and a hodgepodge of other small items left the year at just under $1 2 billion in net sales and $298 million in EBITDA.

Speaker Change: So the fourth quarter was a bit below our declared cycle average quarterly EBITDA of $60 million with the year ended well above that level.

Tony: So the fourth quarter was a bit below our declared cycle average quarterly EBITDA of $60 million for the year ended well above that level.

Speaker Change: Page 11 shows cash flows for the quarter and full year, both are pretty straightforward with EBITDA translating cleanly to operating cash flow helped by a slight decrease in working capital on a normal cash tax rate.

Tony: Page 11 shows cash flows for the quarter and full year, both are pretty straightforward with EBITDA translating cleanly to operating cash flow helped by a slight decrease in working capital on a normal cash tax rate.

Speaker Change: We invested to maintain and expand our manufacturing capabilities and returned most of the excess to shareholders paying 74 million in dividends and $212 million in the year to repurchase shares at a volume weighted average price below $90.

Tony: We invested to maintain and expand our manufacturing capabilities and returned most of the excess to shareholders paying $74 million in dividends and $212 million in the year to repurchase shares at a volume weighted average price below $90.

Speaker Change: LP ended 2024 was $340 million in cash zero net debt.

Tony: LP ended 2024 was $340 million in cash zero net debt and <unk>.

Speaker Change: Almost $900 million in total liquidity.

Tony: <unk> $900 million in total liquidity.

Speaker Change: As of February the 14th LP has paid an additional $51 million to repurchase roughly half a million more shares.

Tony: As of February the 14th LP has paid an additional $51 million to repurchase roughly half a million more shares.

Speaker Change: And this leaves 69 7 million shares outstanding and a $187 million remaining under the pre existing share repurchase authorization.

Tony: This leaves 69 7 million shares outstanding and $187 million remaining under the pre existing share repurchase authorization.

Speaker Change: Now <unk> guidance for the first quarter and full year of 2025 is on page 12.

Tony: Now lp's guidance for the first quarter and full year of 2025 is on page 12.

Speaker Change: Besides the order file continues to be healthy and to be clear consistent with a typical seasonal rebound early in the year.

Tony: But citing the order file continues to be healthy and to be clear consistent with a typical seasonal rebound early in the year now.

Speaker Change: Now while there was minimal price like in January price realization now fully reflects the annual list price increases.

Tony: Now while there was minimal price like in January price realization now fully reflects the annual list price increases.

Speaker Change: Accordingly, we expect sales growth in the first quarter of between nine and 11%.

Tony: Accordingly, we expect sales growth in the first quarter of between nine and 11%.

Speaker Change: For revenue in the $390 million to $400 million range.

Tony: For revenue in the $390 million to $500 million range.

Speaker Change: EBITDA should line between 95 and $105 million for an EBITDA margin of about 25%.

EBITDA should land between 95 and $105 million for an EBITDA margin of about 25%.

Speaker Change: For the full year.

Tony: For the full year.

Speaker Change: Although we currently expect flat housing starts we nonetheless anticipate revenue growth of 7% to nine points, bringing.

Tony: Although we currently expect flat housing starts we nonetheless anticipate revenue growth of 7% to nine points.

Speaker Change: Bringing revenue to between 165 billion and $1 7 billion.

Tony: Bringing revenue to between $1 65 billion and $1 7 billion.

Speaker Change: EBITDA should be between $450 $425 million for.

Tony: EBITDA should be between $450 $425 million for an EBITDA margin again of around 25%.

Speaker Change: And EBITDA margin again of around 25%.

Speaker Change: For OSB, assuming random lengths prices are flat to last Friday's published levels, we would expect first quarter EBIT to land between 35% to $45 million.

Tony: For OSB, assuming random lengths prices are flat to last Friday's published levels, we would expect first quarter EBIT to land between 35% to $45 million.

Speaker Change: And for future quarters, we offer no estimate of OSB prices, mainly revert to cycle average is a reasonable approach to modeling the longer term EBITDA potential of the OSP business.

Tony: And for future quarters, we offer no estimate of OSB prices are mainly revert to cycle average as a reasonable approach to modeling the longer term EBITDA potential of the OSP business.

Speaker Change: I should note that while we're using the same algorithm to estimate cycle average EBITDA. The inclusion of 2024 data. It does increase cycle average EBITDA slightly from $60 to $65 per thousand square feet.

Tony: I should note that while we're using the same algorithm to estimate cycle average EBITDA. The inclusion of 2024 data does increase cycle average EBITDA slightly from $60 to $65 per thousand square feet, which is reflected in the outlook for the second through fourth quarters.

Speaker Change: Which is reflected in the outlook for the second through fourth quarters.

Speaker Change: And finally for the avoidance of doubt we have insufficient clarity about them to incorporate any tariff impacts in our guidance the first quarter and full year guidance. Therefore assumes that current state continues.

Tony: And finally for the avoidance of doubt we have insufficient clarity about them to incorporate any tariff impacts in our guidance the first quarter and full year guidance. Therefore assumes the current state continues.

Speaker Change: Now exciting growth proceeds on this trajectory, we will need new press capacity sometime in the next two to three years.

Tony: Now our exciting growth proceeds on this trajectory, we will need new press capacity sometime in the next two to three years.

Speaker Change: We will need additional pre finishing capacity somewhat sooner.

Tony: We will need additional pre finishing capacity somewhat sooner.

Speaker Change: The chart on page 13 shows the schedule of capacity additions that will be necessary to meet demand under these scenarios.

Tony: The chart on page 13 shows the schedule of capacity additions that will be necessary to meet demand under these scenarios.

Speaker Change: As a result, 2025 will be a year of significant investment.

Tony: As a result, 2025 will be a year of significant investment.

Speaker Change: We expect to spend about $200 million in growth capital largely in the second half of 2025.

Tony: We expect to spend about $200 million in growth capital largely in the second half of 2025.

Speaker Change: In 2026 will also most likely be a year of heavy investment with two expansion projects in parallel as Brad mentioned.

Brad Southern: And 2026 will also most likely be a year of heavy investment with two expansion projects in parallel as Brad mentioned.

Speaker Change: Well have more specifics on timing total project costs and expected returns in coming quarters.

Brad Southern: And we'll have more specifics on timing total project costs and expected returns in coming quarters.

Speaker Change: Sustaining maintenance is also increasing in 2025 with some green and modernization projects in OSB designed to improve efficiency yield and most importantly safety.

Brad Southern: Sustaining maintenance is also increasing in 2025 with some green and modernization projects in OSB designed to improve efficiency yield and most importantly safety.

Speaker Change: So in conclusion 2024 was a strong year.

Brad Southern: So in conclusion 2024 was a strong year.

Speaker Change: We executed our growth strategies and that execution generated over $600 million in operating cash flow, which we invested to maintain and enhance our manufacturing capabilities generate more demand for our products and to develop and reward our people.

Brad Southern: We executed our growth strategies and that execution generated over $600 million in operating cash flow, which we invested to maintain and enhance our manufacturing capabilities generate more demand for our products and to develop and reward our people.

Speaker Change: And we return the rest to shareholders consistent with our capital allocation strategy.

Brad Southern: And we return the rest to shareholders consistent with our capital allocation strategy.

Speaker Change: We believe we have a strategy that works a record of solid execution and a robust balance sheet all of which gives us confidence that we're very well positioned to make the most of what the housing and repair and remodel markets have to offer and to invest further and more product innovation growth capacity expansion and shareholder returns.

Brad Southern: We believe we have a strategy that works a record of solid execution and a robust balance sheet all of which gives us confidence that we're very well positioned to make the most of what the housing and repair and remodel markets have to offer and to invest further and more product innovation growth capacity expansion and.

Brad Southern: And shareholder returns.

Speaker Change: And with that I'll open the call for Q&A operator.

Brad Southern: And with that I'll open the call for Q&A operator.

Speaker Change: Certainly as a reminder to ask a question. Please press star one wondering your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again and please standby, while we compile our Q&A roster.

Speaker Change: Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again and please standby, while we compile our Q&A roster.

Speaker Change: One moment for your first question.

Brad Southern: Our first question.

Speaker Change: Our first question will be coming from Michael Rocks, Linda I'm curious Securities. Your line is open Michael.

Brad Southern: Our first question will be coming from Michael rocks lineup curious Securities. Your line is open Michael.

Michael Rocks: Yeah. Thank you Brad Alan and thanks for taking my questions. Congrats on a strong finish to the year.

Speaker Change: Okay.

Brad Southern: Okay.

Brad Alan: Thanks, Mike.

Mike: Thank you Mike.

Speaker Change: <unk>.

Speaker Change: I'm wondering if you could comment obviously exciting demand is as you've noted continuing to be strong could you comment on the <unk> pull through and help us think about the cadence of that growth this year.

Speaker Change: I'm wondering if you could comment obviously exciting demand is continuing to be strong could you comment on the Lamar pulled through and help us think about the cadence of that growth this year.

Speaker Change: Yes, so I would say we have ramped into.

Speaker Change: Like full contract execution with Lenoir, you know there was a ramp up period. After the deal was signed we didn't get all the homes immediately obviously.

Speaker Change: So we're running at full scale with them.

Speaker Change: We're in the second year of that agreement.

Speaker Change: And we're in the second year of that agreement.

Speaker Change: And.

Speaker Change: I would say, it's at or exceeded at or have exceeded our expectations as far as volume pull through.

Speaker Change: We just hit it does I mean at or exceeded what he would say its more the ladder in the admin.

Speaker Change: We just hit it does I mean at or exceeded what he would say it's more the latter than the at need.

Speaker Change: This platform.

Speaker Change: It's performed.

Speaker Change: Yeah, it's performed as expected, yes, sorry for any confusion.

Speaker Change: We are contracted for a certain amount of homes that we've gotten those those homes.

Speaker Change: A little extra here and there but.

Speaker Change: Materially.

Speaker Change: Within the bounds of the agreement.

Speaker Change: Got it okay.

Speaker Change: And just second question I have just given the weakness or what had been weakness in commodity OSB have you have you shifted any more of the production to structural solutions, which should be which are margin accretive and are you handicapping any way for making a large shift to shrug solutions from commodity OSB, particularly as you look to build out.

Speaker Change: And just second question I have just given the weakness or what had been weakness in commodity OSB have you have you shifted any more of the production to structural solutions, which should be which are more margin accretive and are you handicapping any way for making a large shift to shrug solutions from commodity OSB, particularly as you look to build out.

Speaker Change: Bill a series given given tie any cross sell opportunities.

Speaker Change: Yes.

Speaker Change: We do have to invest to continue to grow structural solutions from a manufacturing standpoint.

Speaker Change: Those investments tend to be small.

Speaker Change: Those investments tend to be.

Speaker Change: Small, especially relative to a siding conversion and fairly quick to execute so there are times that we run into some constraints around.

Speaker Change: Product availability and structural solutions, but that's very rare.

Speaker Change: So, yes, youre right as commodity pricing.

Flattens out or below.

Speaker Change: Flattens out or below.

Speaker Change: Trend lines, and we really enjoy that incremental margin, we get from structural solutions and our strategy is to continue to to sell.

Speaker Change: Trend lines, we really enjoy that incremental margin, we get from structural solutions and our strategy is to continue to to sell.

Speaker Change: Our strategy for that pull those skus through distribution and capture that margin that's been it's.

Speaker Change: Our strategy for that pull those skus through distribution and capture that margin that's been spent.

It's been a key part of our strategy and proud of where we were in 2024, and we have plans to grow on that in 2025.

Speaker Change: It's been a key part of our strategy and proud of where we were in 2024, and we have plans to grow on that in 2025.

Yeah, Thanks very much.

Speaker Change: Yeah, Thanks very much.

Speaker Change: Welcome.

Speaker Change: And our next question.

Speaker Change: Our next question comes from John <unk> of BMO capital.

Speaker Change: Our next question comes from John <unk> of BMO capital markets. Your line is open.

Speaker Change: Little markets. Your line is open.

Speaker Change: Good morning, and thanks for taking my question.

John: Good morning, and thanks for taking my question.

Speaker Change: Perhaps just talk based on siding can you talk about the.

John: Perhaps just stock based on siding can you talk about the.

Speaker Change: The EBIT margin level and in filing for 2025 clearly the export finished business is growing quite nicely and we know that.

John: EBITA margin level and in siding for 2025, clearly the export finished business is growing quite nicely and they know what that is.

Speaker Change: Although at a higher price point products should be margin enhancing any talk about the uplift offsetting factors.

John: Although at a higher price point products should be margin enhancing any talk about the uplift offsetting factors.

Speaker Change: That may be keeping margins at the same level is it SG&A is if anything Alex.

John: That may be keeping margins at the same level is is it SG&A is if anything Alex.

Speaker Change: Yes, Thanks, Keith for the question I'm sure that's a that's a bit of a burning question.

John: Yes, Thanks, Keith for the question I'm sure that's.

John: A bit of a burning question.

Speaker Change: I do want to say, so I'm going to be sort of try and be a little thoughtful and careful in my response.

I do want to say, so I'm going to be sort of try and be a little thoughtful and careful in my response.

Speaker Change: This is the first time.

John: This is the first time.

Speaker Change: That we've guided to a 25% EBITDA margin for the siding business. So I do want to.

John: That we've guided to a 25% EBITDA margin for the siding business. So I do want to.

Speaker Change: So I'll sort of answer the question in reverse the volume leverage in that price flow through that you're used to seeing on our waterfalls that you see in the Q4 and the 2020 for full year waterfall that portfolio are expected to continue.

John: So I'll sort of answer the question in reverse the volume leverage and the price flow through that you're used to seeing on our waterfalls that you see in the Q4 and the 2020 for full year waterfall that portfolio are expected to continue.

Speaker Change: Let's say that.

John: Let's say that.

Speaker Change: The pure volume conversion of rent.

The pure volume conversion of rent.

Speaker Change: Revenue to EBITDA at about 40% and of course price close to 100%.

John: Revenue to EBITDA at about 40% of course price close to 100%.

Speaker Change: So we get that kind of blended.

John: So we get that kind of blended.

Speaker Change: Volume and price flow through of about 65%.

John: Volume and price flow through of about 65%.

Speaker Change: So thank you for the question, but we're not harvesting.

John: So thank you for the question, but we're not harvesting.

Speaker Change: It's way too early in Lp's growth trajectory for us to even consider that so the costs that are included in this full year guide is about $20 million of inflation now a third of that labor. So that certain the remainder is let's call. It raw materials and I will admit that's largely speculative.

John: It's way too early in Lp's growth trajectory for us to even consider that so the costs that are included in this full year guide is about $20 million of.

Of inflation now a third of that labor. So thats certain the remainder is let's call it raw materials and I will admit that's largely speculative.

Speaker Change: There is about $10 million to $15 million closer to the high end of additional selling and marketing expense and so yes in order to generate.

John: There is about $10 million to $15 million closer to the high end of additional selling and marketing expense and so yes in order to generate future business as well as help secure this year's growth.

Speaker Change: Future business as well as help secure this year's growth.

Speaker Change: We are continuing to invest in that.

John: We are continuing to invest in selling and marketing dollars.

Speaker Change: Selling and marketing dollars.

Speaker Change: I've said it before.

John: <unk> said it before.

Speaker Change: On sort of broad public calls are individual discussions we encouraged us we encourage.

John: Sort of broad public calls.

John: Individual discussions we encouraged us we encourage.

Speaker Change: Hi.

Speaker Change: Discretionary selling and marketing investments in order to generate future growth I will say that the push into repair and remodel does require let's call. It a higher level of marketing dollars per.

John: Discretionary selling and marketing investments in order to generate future growth I will say that there's a push into repair and remodel.

John: Does require let's call it a higher level of marketing dollars per.

Speaker Change: Perfect.

John: Perfect.

Speaker Change: Of business gained.

John: The business gained.

Speaker Change: Then again further on the discretionary side, there's roughly $5 million of let's call it engineering costs and staffing associated with capacity expansions and some additional mill stuffing very much in the hope that the market or the market share gains give us further growth.

John: Then again further on the discretionary side, there's roughly $5 million of let's call it engineering costs and staffing associated with capacity expansions.

John: Some additional mill staffing, but very much in the hope that the market or the market share gains give us further growth.

Speaker Change: On top of the amount that we've guided to.

John: On top of the amount that we've guided to.

Speaker Change: So we are certainly as always building in.

John: So we are certainly as always building in.

Speaker Change: The necessary.

John: The necessary.

Speaker Change: Discretionary spending that would help us.

John: Discretionary spending that would help us.

Speaker Change: Overachieve.

John: Overachieve.

Speaker Change: And there's about one and a half to two percentage point margin impact from all of that stuff that I. Just described what's not included.

John: And there's about one and a half to two percentage point margin impact from all of that stuff that I. Just described what's not included.

Speaker Change: We have not assumed any material price mix favorability I'd say, it's too early to know whether or not and how expect finished will progress in the year, we're obviously optimistic but it always feels a bit reckless to.

John: We have not assumed any material price mix favorability.

Too early to know whether or not and how expect finished will progress in the year, we're obviously optimistic but it always feels a bit reckless to.

Speaker Change: Two to just just basically take that as a given given the fact that 2025.

Two to just just basically take that as a given given the fact that 2025.

Speaker Change: Housing market is going to be challenging it's a flat market in housing and probably down in <unk>. So this is definitely a market share gain here and we can't always predict where and quite how and when those market share gains.

John: Housing market is going to be challenging it's a flat market in housing and probably down in <unk>. So this is definitely a market share gain here and we can't always predict where and quite how and when those market share gains.

Speaker Change: Okay.

John: Okay.

Speaker Change: So.

John: So.

Speaker Change: Samsung.

John: Samsung.

Speaker Change: Thanks Alan.

John: Thanks Alan.

Speaker Change: That's very helpful and a detailed so I appreciate it and then switching to.

John: That's very helpful and a detailed so I appreciate it and then switching to.

Speaker Change: Siding capacity expansion on hold on line two can you share with us at this point kind of what kind of capacity expansion you are.

John: Siding capacity expansion.

John: Holton line too can you share with us at this point kind of what kind of capacity expansion you are.

Speaker Change: You are planning and what kind of investments will be online tool.

John: You are planning and what kind of investments will be online tool.

Speaker Change: Okay. Thank you.

John: Okay. Thank you.

Speaker Change: Yes, Keith that will add about 300 million feet of volume.

Speaker Change: Holton expansion would be adding a parallel manufacturing line to the to the existing mill, so adding a forming line in our press.

Speaker Change: I don't think we've gotten into the details precisely of how expensive that is going to be haven't yet.

Speaker Change: But the returns are consistent with previous.

Speaker Change: Previous expansion projects that we've had as we get closer to that and and have more specifics about timing and things like that will we'll be able to share that.

Speaker Change: And Keith I would just say from a manufacturing standpoint, we'd be focusing that line on a lap and trim capacity versus panel.

Speaker Change: Keith I would just say from a manufacturing standpoint, we'd be focusing that line on a lap and trim capacity versus panel.

Speaker Change: Got it that's very helpful I come back in the queue, good luck and training.

Thank you Kate and thanks Keith.

Speaker Change: Thank you Kate and thanks Keith.

Speaker Change: And one moment our next question.

Speaker Change: Our next question will be coming from Susan Mcclary of Goldman Sachs. Your line is open season.

Charles Perron: Thank you. Good morning. This is Charles Perron Infor Susan today.

Speaker Change: Voice has gone down a couple of active citizens.

Charles Perron: Yeah.

Charles Perron: Yes, no maybe.

Charles Perron: Maybe first I wanted to ask about deciding guide and the application for the volume outperformance versus the market, where do you see the biggest unfortunately for growth and outperformance across.

Charles Perron: New construction R&R and maybe shed as we look into 2025.

Charles Perron: Yeah. Good question, we are really expecting a volume growth.

Charles Perron: All product offerings. This year there is when we compare to 2024, there probably is some recovery volume or percentage and share of shelf was rather weak, especially first half of last year. So unfortunately, that's back to normal if not a little strong right now so that the b if any.

Charles Perron: Sector is kind of leading the.

Charles Perron: Sector.

Charles Perron: Kind of leading the.

Charles Perron: The good growth.

Charles Perron: At the moment, but we're expecting above margin growth across all sectors retail.

Charles Perron: Builder, new construction as well as repair and remodel and we're also looking at it across all geographies. So we've got a really.

Charles Perron: We're off to a good start and the visibility we have into order files to strength really strength everywhere.

So we're off to a good start and the visibility we have into order files to strength really strength everywhere.

Speaker Change: Got you that's good color.

Speaker Change: And maybe you can talk about also the raw material and freight expectation for 25, I think on siding you alluded for $20 million of inflation, what does it imply for price cost and how would potential tariff impact youre, citing cost structure as we think about the year ahead.

Speaker Change: And maybe you can talk about also the raw material and freight expectation for 25, I think on siding you alluded for $20 million of inflation, what does it imply for price cost and how would potential tariff impact you're citing cost structure as we think about the year ahead.

Speaker Change: Well I'll take the easy one first and that will avoid the second one.

Speaker Change: The 20 million I referenced does include about eight.

Speaker Change: $8 million of labor inflation, so that as it was certain that that's already been given and gifted.

Speaker Change: $8 million or sort of labor.

Speaker Change: Labor inflation.

Speaker Change: As it was sudden that's that's already been given and gifted.

Speaker Change: And the rest is raw material.

Speaker Change: And.

Speaker Change: There will be we think we will see increases in paper overlay costs, mostly offset by reductions in MDI costs. So so.

Speaker Change: There will be we think we'll see increases in paper overlay costs, mostly offset by reductions in MDI costs. So so.

Speaker Change: There is there is some potential for.

Speaker Change: Raw material inflation, but I will admit that that thesis.

Speaker Change: So raw material inflation, but.

Speaker Change: I'll admit that thesis.

Speaker Change: Totally speculative but I.

Speaker Change: Speculative.

Speaker Change: Contemplate doing anything in particular, but most of our major raw material other than wood.

A couple of point to anything in particular, but most of our major raw material other than wood.

Speaker Change: Our indexed to various derivative products that go into it so.

Speaker Change: We have to do some kind of forecasting around benzene cost.

Speaker Change: We have to do some kind of forecasting around benzene costs.

Oil costs.

Speaker Change: Oil costs.

Speaker Change: Two to do these analysis. So that's the that's the analysis that we did that drove the assumptions around the price increases for raw materials other than wood.

Speaker Change: Two to do these analysis so that's the.

Speaker Change: The analysis that we did that drove the assumptions around the price increases for raw materials other than wood.

Speaker Change: Got it thank you guys.

Speaker Change: No.

Speaker Change: Yes.

Speaker Change: Yeah, and there is no no assumptions.

Speaker Change: And there is no no assumptions.

Speaker Change: <unk>.

Speaker Change: Nothing that we've talked about as far as the cost assumes any.

Tariffs are placed on our raw material flows.

Speaker Change: Tariffs are placed on our raw material flows.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: And one on that our next question.

Speaker Change: And one on our next question.

Speaker Change: Our next question will be coming from Sean Stewart of TD Cohen, John Your line is open.

Sean Stewart: Thanks, Good morning, everyone. A couple questions I wanted to revisit tariff exposure.

Sean Stewart: Thanks, Good morning, everyone. A couple of questions I wanted to revisit tariff exposure.

Sean Stewart: Can you give us a sense of your approach and engaging with customers on OSB and siding.

Speaker Change: Can you give us a sense of your approach and engaging with customers on OSB and siding.

Sean Stewart: If and when tariffs materialize is the intention.

If and when tariffs materialize as the intention to.

Sean Stewart: To try and pass it on.

Speaker Change: Try and pass it on.

Sean Stewart: And incomplete.

Speaker Change: And complete.

Brad Alan: To fully offset the tariff in terms of pricing and Brad I'm. Just wondering if you can speak to I guess.

Fully offset the tariff in terms of pricing.

Speaker Change: And Brad I'm, just wondering if you can speak to I guess Youre your perspective on.

Sean Stewart: Your your perspective on.

Sean Stewart: Demand elasticity intention in the market the ability to pass those tariffs on and.

Speaker Change: Demand elasticity intention in the market the ability to pass those tariffs on and.

Sean Stewart: And how much of a supply response might be needed for both OSB and siding.

Speaker Change: And how much of a supply response might be needed for both OSB and siding.

Sean Stewart: Well you know for OSB, it's a traded commodity so.

Speaker Change: For OSP is to try to commodity so.

Sean Stewart: No.

Speaker Change: No.

Sean Stewart: Theres not a direct way to pass cost.

Speaker Change: Theres not a direct way to pass cost.

Sean Stewart: Paul onto the customer and OSB other than through at the trading floor, so that ought to be.

Speaker Change: Paul onto the customer OSB other than through at the trading floor, so that ought to be.

Sean Stewart: You know how that works so.

Speaker Change: How that works so there is the <unk>.

Sean Stewart: The price of OSB will be the price of OSB.

Speaker Change: Rice of OSB will be the price of OSB.

Sean Stewart: And the cost structure.

Speaker Change: And the cost structure.

Sean Stewart: Our cost.

Speaker Change: The cost.

Sean Stewart: For trying to the industry.

Speaker Change: Cost structure trying to the industry.

Sean Stewart: Due to tariffs will reset the cost curve and price will be where price will be.

Speaker Change: Due to tariffs will reset the cost curve and price will be where price will be.

Sean Stewart: It's hard to know what the impact will be on siding.

Speaker Change: It's hard to know what the impact will be on siding with the information that we have today as you know we do have two outside of the mills in.

Sean Stewart: Information that we have today as you know we do have two outside mills in <unk> and.

Sean Stewart: In Canada, we have the ability to to move volume around in our network.

Speaker Change: In Canada, we have the ability to to move volume around in our network.

Sean Stewart: And there are some things we can do on supply chain to optimize the supply chain if tariffs were to change the dynamics there.

Speaker Change: So.

Speaker Change: There are some things we can do on the supply chain to optimize the supply chain if tariffs were to change the dynamics there.

Sean Stewart: And so we certainly have done scenario planning around what we would do and how we would go about doing it but we haven't gotten to a situation yet where we've really.

Speaker Change: And so we certainly have done scenario planning around what we would do and how we would go about doing it but we haven't gotten to a situation yet where we've really.

Sean Stewart: Put a number on it because of the lack of clarity and we've had minimal obviously customers are aware that the industry is would be significantly impacted across the board.

Speaker Change: Put a number on it because of the lack of clarity and we've had minimal obviously customers are aware that the industry is would be significantly impacted across the board, particularly.

Sean Stewart: Particularly Canadian tariffs.

Speaker Change: Particularly Canadian tariffs.

Sean Stewart: But we haven't gotten into any level of discussion around how that would get manifested from a siding perspective.

Speaker Change: But we haven't gotten into any level of discussion around how that would get manifested from a siding perspective.

Speaker Change: Okay. Thanks for that Brad.

Sean Stewart: Okay. Thanks for that Brad.

Speaker Change: I wanted to revisit the 2025 siding sales growth.

Speaker Change: Targets that you've provided the 7% 9% sales growth.

Sean Stewart: Targets that you've provided the 7% to 9% sales growth.

Speaker Change: And maybe I'm Paraphrasing, you tell me, if I'm right and if there's any nuance to it but 7% to 9% reflects market share gains.

Sean Stewart: And maybe I'm Paraphrasing, you tell me, if im right and if there's any nuance to it but 7% to 9% reflects market share gains.

Speaker Change: Still a very difficult housing environment.

Sean Stewart: And still a very difficult housing environment.

Speaker Change: In a more normalized scenario, where we potentially get a bit of an uplift in housing is 10% annual sales growth.

Sean Stewart: Normalized scenario, where we potentially get a bit of an uplift in housing.

Sean Stewart: 10% annual sales growth.

Speaker Change: L. A feasible number for you guys and when Youre thinking about it longer term growth.

Sean Stewart: L. A feasible number for you guys and when Youre thinking about it longer term growth.

Speaker Change: Whether its holding to our expansion beyond that is that the.

Sean Stewart: Whether its holding to our expansion beyond that is that.

Speaker Change: The premise of the longer term sales growth potential for that segment.

Sean Stewart: At the.

Sean Stewart: The premise of the longer term sales growth potential for that segment.

Speaker Change: Sean.

Sean Stewart: Sean.

Speaker Change: So certainly.

Sean Stewart: So certainly.

Single family housing recovery.

Sean Stewart: Single family housing recovery.

Speaker Change: Along with broader.

Sean Stewart: Along with broader book.

Speaker Change: I mean look to get a little more detail, which would probably drive increased R&R spend if we got existing home sales as a part of it well, let me back up even more if interest if mortgage rates were lower.

Sean Stewart: Get a little more detail, which would probably drive increased R&R spend if we got existing home sales as a part of that well, let me back up even more if interest if mortgage rates were lower.

Speaker Change: And the housing market took off across the board, we would see increases in single family construction, we would see increases in R&R span and that would provide a really nice tailwind that we haven't had since the COVID-19 tailwind, which was the tailwind of volatile wins.

Sean Stewart: And the housing market took off across the board, we would see increases in single family construction, we would see increases in R&R span and that would provide a really nice tailwind that we haven't had since the COVID-19 tailwind, which was the tailwind of <unk>.

Speaker Change: And that would certainly.

Sean Stewart: And that would certainly push the addressable market realtime addressable market for us up and allow us to grow at a higher growth rate than what we're seeing in a in a year where.

Speaker Change: Push the addressable market realtime addressable market for us up and allow us to grow at a higher growth rate than what we're seeing in a in a year where.

Speaker Change: We were kind of expecting the market to be flat may not also in siding, probably gives you a little more pricing pressure pricing opportunity, which means that the revenue you get maybe another point on the revenue as a result of that.

Sean Stewart: We were kind of expecting the market to be flat also in siding, probably gives you a little more pricing pressure pricing opportunity, which means that the revenue you get maybe another point on the revenue as a result of that.

Speaker Change: So if you're if your question is wood.

Sean Stewart: So yes, if your question is wood.

Speaker Change: Recovering and stronger housing market and R&R market allow us to go above 7% to 9% growth, yes, it would and both both helping them volume and pricing I believe.

Sean Stewart: Recovering and stronger housing market and R&R market allow us to go above 7% to 9% growth, yes, it would and both both helping them volume and pricing I believe.

Speaker Change: And just just to.

Sean Stewart: And just just pointed.

Speaker Change: Got it points back capacity investments are biggest fear in Nashville is that.

Pointed out capacity investments are biggest fear in Nashville.

Speaker Change: We would as being late.

Sean Stewart: We would as being late.

Speaker Change: To that policy. So we've got to make sure that we have the capacity because we are convinced that it is going to happen at some point.

Sean Stewart: To that policy. So we've got to make sure that we have the capacity because we are convinced that it is going to happen at some point.

Speaker Change: We need to be ready.

Sean Stewart: We need to be ready.

Speaker Change: Yeah.

Speaker Change: Understood.

Sean Stewart: Understood.

Speaker Change: It's all I have for now thanks very much.

Sean Stewart: That's all I have for now thanks very much welcome.

Sean Stewart: Welcome Thanks, Sean.

Welcome Thanks, Sean.

Speaker Change: Our next question.

Sean Stewart: Our next question.

Speaker Change: Our next question will be coming from Steven Ramsey of Thompson Research Group. Your line is open Steven.

Steven Ramsey: Hi, good morning, maybe to start with the order file in siding be encouraging if I recall. This is what you guys were seeing a year ago early in 2024 I'm curious what the makeup of the order file now is compared to a year ago and it.

Hi, good morning.

Speaker Change: To start with the order file in siding be encouraging if I recall. This is what you guys were seeing a year ago.

Speaker Change: Early in 2024, I'm curious what the makeup of the order file now is compared to a year ago and if it's telling you anything.

Steven Ramsey: It's telling you anything different compared to a year ago. When you think about the portfolio between smart site builder series and expert finish.

Speaker Change: Different compared to a year ago. When you think about the portfolio between smart site builder series and expert finish.

Steven Ramsey: I would say that the only material difference in the order file strength this quarter versus year ago was we have seen stronger share pools. This year than we had last year in the first quarter other than that.

Speaker Change: I would say that the only material difference in the order file strength this quarter versus year ago was we have seen stronger share pools. This year than we had last year in the first quarter other than that.

Steven Ramsey: <unk>.

Speaker Change: The other single family.

Steven Ramsey: Other.

Steven Ramsey: Single family, where our big builder.

Speaker Change: <unk>.

Steven Ramsey: Retail and R&R are consistent with what we were seeing in Q1 of last year and the same thing's true geographically if that's of interest.

Speaker Change: Retail and R&R are consistent with what we were seeing in Q1 of last year and the same thing's true geographically if that's of interest.

Speaker Change: Okay. That's helpful. And then secondly back margin. This has been on a positive trajectory over the last year or two is there an assumption that it stays on that kind of trajectory in 2025 or maybe another way to ask it is it less of a margin hedge.

Speaker Change: Okay. That's helpful. And then secondly back margins. This has been on a positive trajectory over the last year or two is there an assumption that it stays on that kind of trajectory in 2025 or maybe another way to ask it is it less of a margin headwind.

Speaker Change: Wind in 25 than it was last year, even as its increasing.

Wind in 25 than it was last year.

Speaker Change: Even as its increasing.

Speaker Change: I haven't we.

Speaker Change: We basically assumed in.

Speaker Change: We basically assumed.

Speaker Change: In our guide and our budgeting that we make.

Speaker Change: And our guide and our budgeting that we make.

Speaker Change: Kind of make slow progress in 2025 still improving but.

Speaker Change: Kind of make slow progress in 2025 still improving.

Speaker Change: We're adding capacity.

Speaker Change: But we're adding capacity.

Speaker Change: At a rate that.

Speaker Change: Well it will drag on that level, but it's improving.

Speaker Change: That will it will drag on that level, but it's improving definitely but not quite by that same amount as in 2024.

Speaker Change: Ali.

Speaker Change: Not quite by that same amount as in 2024.

Speaker Change: That's our modeling assumption anyway.

Speaker Change: Great. Thank you.

Speaker Change: One moment for our next question.

Speaker Change: One moment our next question.

Speaker Change: Our next question will be coming from Mark Weintraub of Seaport Research partners. Your line is open Mark.

Mark Weintraub: Thank you first Allan just one point of clarification. So when you were talking on the siding margin Bridge, you mentioned price mix flattish or was that just mix or are you still should we are we still building in like 3% on.

Mark Weintraub: Thank you first Allan just one point of clarification. So when you were talking on the siding margin Bridge, you mentioned price mix flattish or was that just mix or are.

Mark Weintraub: Are you still should we are we still building like 3% on.

Mark Weintraub: Rice from from list price adjustments, Oh, yes, yes, yes, what I meant was this year, we enjoyed something closer to six I don't model that additional mixed benefit.

Mark Weintraub: Price from from list price adjustments, Oh, yes, yes, yes, what I meant was that this year, we enjoyed something closer to six I don't model that additional mixed benefit.

So yes, the underlying price increases exactly that.

Mark Weintraub: So yes, the underlying price increases exactly that.

Speaker Change: Gotcha, So we do get that let's say $45 million or something.

Mark Weintraub: Got you and then second.

Mark Weintraub: So you spoke on siding, how you've been driving the market share gains through innovation and demand creation efforts last year, we had <unk> <unk> home.

Speaker Change: So you spoke on siding, how you've been driving the market share gains through innovation and demand creation efforts and last year, we had lennart Holm.

Mark Weintraub: Home Depot, and you had the smooth side introduction, although maybe that's built into this year more maybe can you talk a little bit more about more specifically what some of the items that are going to help drive that this year will be that or perhaps a new and different.

Speaker Change: Home depot had a smooth side introduction, although maybe that built into this year more maybe can you talk a little bit more about more specifically what some of the items that are going to help drive that this year will be debt or perhaps new and different.

Speaker Change: Well, we would invite anybody to come by our booth.

Speaker Change: Well.

Speaker Change: Would invite anybody to come by our booth.

Speaker Change: In Las Vegas next week and take a look at the new products that we've launched and talked about but also some new things that we have on board.

Speaker Change: Things around coloring for our pre finish.

Speaker Change: Really interesting.

Speaker Change: Some really interesting.

Speaker Change: <unk> expansion, there obviously to your point having.

Speaker Change: Product expansion, there obviously to your point having.

Speaker Change: Full portfolio, a smooth and market all of this year, including January.

Speaker Change: Full portfolio, a smooth and market all of this year, including January is a nice add compared to last year at this time.

Speaker Change: It's a nice add compared to last year at this time.

Speaker Change: So innovation has been a key to all the growth we've gotten particularly after we've gotten come off allocation.

Speaker Change: Some of that work was done before COVID-19, but the builder series and expert finished growth as we've talked about Mark has been phenomenal. So we certainly innovation will continue to play a big part in our growth story, because that increases our addressable market with customers that we have.

Speaker Change: Some of that work was done before COVID-19, but the builder series and export finished growth as we've talked about Mark has been phenomenal. So we certainly innovation will continue to play a big part in our growth story, because that increases our addressable market with customers that we have.

Speaker Change: The easiest customer to sale and then as far as expanding customers, we are continuing to make inroads.

Speaker Change: That's the easiest customer to sale and then as far as expanding customers, we are continuing to make inroads.

Speaker Change: Round builders, both large medium size and small.

Speaker Change: And then the on the R&R side, that's a contractor play in.

Speaker Change: And then on the R&R side, that's a contract or play in.

Speaker Change: The number is how many loyal contractors do you have.

Speaker Change: Pushing and install on your product and Thats.

Speaker Change: A big part of the marketing spend.

Speaker Change: A big part of the marketing spend increased that Alan talked about is in support of that initiative that that's just a steady.

Speaker Change: Increased that Alan talked about is in support of that initiative that that's just a steady.

Speaker Change: Constant execution play that will never Ian I mean, there is a lot of siding contractors in North America, and we are selling to a rather small percentage of them.

Speaker Change: Constant execution play that will never end I mean, there is a lot of siding contractors in North America, and we are selling to a rather small percentage of them and so the opportunity. There is huge and it's just a annual localized execution that we're encouraged by the progress that we've made.

Speaker Change: So the opportunity there is huge and it's just a annual localized execution that we're encouraged by the progress that we've made I'm encouraged about what we've learned about how to do that.

Speaker Change: I am encouraged about what we've learned about how to do that.

Speaker Change: And that's given us a lot of confidence that we'll be able to continue to grow as we gain that expertise round out the portfolio of products.

And that's given us a lot of confidence that we will be able to continue to grow as we gain that expertise round out the portfolio of products.

Speaker Change: In the case of repair and remodel continue to strength in distribution.

Speaker Change: In the case of repair and remodel continue to strengthen distribution and.

Speaker Change: And and create a recognizable brand.

Speaker Change: Creator a recognizable brand.

Speaker Change: It's beautiful and works well and customers will want a contractors want to install.

Speaker Change: That's beautiful and it works well and customers will want a contract with want to install.

Speaker Change: Thank you Brad and then just lastly, I know you've had efforts underway to try to get a better sense of where customer inventories are.

Speaker Change: Thank you, Brian and then just lastly, I know you've had efforts underway to try to get a better sense of where customer inventories are.

Speaker Change: Question two part one where are you in that process do you feel that you know do you have a much better sense.

Speaker Change: Where customer inventories in signings tend to be where are and where are they currently.

Speaker Change: Where customer inventories in siding.

Speaker Change: Where are and where are they currently.

Speaker Change: Yeah. So look we will never have perfect visibility, but we have way better visibility we've ever had and over the last couple of years, it's gotten a lot better and we are normal for where we would expect to be here in the middle of February which is a little on the high side, because coming up coming into the year distributors 10.

Yes, so look we will never have perfect visibility, but we have way better visibility than we've ever had and over the last couple of years, it's gotten a lot better.

Speaker Change: We are normal for where we would expect to be here in the middle of February which is a little on the high side, because coming up coming into the year distributors tend to want to build some inventory in anticipation of the spring selling season and so it's it's a.

Speaker Change: To want to build some inventory in anticipation of the spring selling season and so it's it's.

Speaker Change: There's more in the channel now than there was 30 days ago, but normal given where we are as it relations to the in relationship to the homebuilding season.

Speaker Change: There is more in the channel now than there was 30 days ago, but normal given where we are as it relations to the in relationship to the homebuilding season.

Speaker Change: Busy season.

Speaker Change: R&R contractors being able to get back outside and get to work. So we're pleased with where inventories are I am very pleased with the way we were able to manage that with the cooperation of our distribution base through the price increase and across year end as well.

Speaker Change: Thanks, so much.

Speaker Change: Yep.

Speaker Change: Yes.

Speaker Change: And one moment for our next question.

Speaker Change: And our next question.

Speaker Change: Our next question will be coming from Matthew Matt Keller of RBC capital markets. Your line is open Matthew.

Speaker Change: Our next question will be coming from Matthew Mckellar of RBC capital markets. Your line is open Matthew.

Matthew Keller: Good morning, Thanks for taking my questions.

Speaker Change: Good morning, Thanks for taking my questions.

Just looking at your siding capacity slide am I correct in thinking this implies youll start investing in another siding line essentially as you complete the expansion at Holden.

Matthew Mckellar: Just looking at your siding capacity slide am I correct in thinking this implies youll start investing in another siding line essentially as you complete the expansion at Holden.

Matthew Keller: And with that if I can.

Speaker Change: And with that if I can.

Matthew Keller: And is there are lots of moving parts here, but how would you think about what the trough for siding margins looks like as you work through this next capacity cycle.

Matthew Mckellar: And is there are lots of moving parts here, but how would you think about what the trough for siding margins looks like as you work through this next capacity cycle.

Matthew Keller: I'll talk a little bit about the execution, Eric joined and he is part of that team and then Alan can speculate on margin.

Speaker Change: I'll talk a little bit about the execution, Eric joined <unk> as part of that team and then Alan can speculate on margin.

Speaker Change: With a double double execution, so I've been part of siding for 20 years or so 25 years is the first time.

Matthew Keller: <unk>.

Speaker Change: <unk>.

Matthew Keller: We ended up doing it which we certainly believe that's going to be required will be running two parallel expansion projects.

Speaker Change: We ended up doing it which we certainly believe that's going to be required will be running two parallel expansion projects.

Matthew Keller: Not completely overlap with will start Holton first but then move into the second one after that.

Speaker Change: Not completely overlap with will start Holton first but then move into the second one after that and.

Matthew Keller:

To be pretty intense we are staffing as Alan talked about up our engineering group in anticipation of that.

Speaker Change: It's going to be pretty intense we are staffing as Alan talked about up our engineering group in anticipation of that.

Matthew Keller: A lot of that work will be executed with.

Speaker Change: A lot of that work will be executed.

Matthew Keller: With contract engineers, but we are increasing our in house capability as well and it.

Speaker Change: With contract engineers, but we are increasing our in house capability as well.

Matthew Keller: It's pretty exciting to be in a position now given our scale, we're 10% growth leads to.

Speaker Change: It's pretty exciting to be in a position now given our scale, we're 10% growth leads to.

Matthew Keller: US being kind of a continual expansion mode versus.

Speaker Change: US being kind of a continual expansion mode versus more of a batch process that we've had in the past.

Matthew Keller: More of a batch process that we've had in the past.

So that provides good continuity on expertise good continuity with vendors that are that are a big part of those expansions.

Speaker Change: So that provides good continuity on expertise good continuity with vendors that are that are a big part of those expansions. So yes. It will be we'll be starting holton and talking specifically about that soon and then shortly after that have have a decision made on player. The second the next the VIX.

Matthew Keller: So yes, it will be we'll be starting holton and talking specifically about that soon and then shortly after that have have a decision made on player. The second the next the next capacity expansion goes as we've mentioned in the prepared comments, we have a lot of options.

Speaker Change: Expansion goes as we've mentioned in the prepared comments, we have a lot of options.

Matthew Keller: And we are narrowing those options today.

Speaker Change: And we are narrowing those options today and I'll just.

Matthew Keller: So future tariff situation will have an impact on that decision, obviously, because we have opportunities in both our options in both Canada and in the U S.

Speaker Change: So future tariff situation will have an impact on that decision, obviously, because we have opportunities in both our options in both Canada and in the U S.

Matthew Keller: Alright, Thank you Bret and Arista has gone out on a limb.

Speaker Change: Alright, Thank you Bret and Arista has gone out on a limb.

Speaker Change: Hi.

Matthew Keller: I think we're more likely to be having.

Speaker Change: I think we're more likely to be having.

Matthew Keller: When we're in the throes of these.

Speaker Change: When we in the throes of these.

Matthew Keller: Sort of parallel expansion, having a conversation.

Speaker Change: Parallel expansion, having a conversation.

Matthew Keller: That's similar to this one about margins.

Speaker Change: Similar to this one about margins.

Matthew Keller: I think it will be closer to why the Hell op margins rising as opposed to why they're falling it's more likely that you might see us.

Speaker Change: I think it will be closer to why the Hell op margins rising as opposed to why they're falling it's more likely that you might see us.

Matthew Keller: Absorbing again.

Speaker Change: Absorbing again additional benefits of additional growth with the with.

Matthew Keller: Additional benefits of additional growth with the with the headwinds that comes from margin expansion. So I would like to believe that our scale has reached a point where.

Speaker Change: The headwinds that comes from margin expansion. So I would like to believe that our scale has reached a point where.

Matthew Keller: That's sort of rising sine wave.

Speaker Change: That's sort of rising sine wave.

Matthew Keller: Has a higher minimum.

Speaker Change: Has a higher minimum than before.

Matthew Keller: Before.

Matthew Keller: Okay.

Speaker Change: Mhm.

Matthew Keller: Great. Thanks, very much for all that color.

Speaker Change: Great. Thanks, very much for all that color.

Matthew Keller: Next one for me just sticking with what's your capacity plans.

Speaker Change: Next one from me just sticking with what's your capacity plans and.

Matthew Keller: And talking to the investment in Green Bay.

Speaker Change: And thank you to the investment in Green Bay.

Matthew Keller: From the incremental capacity as shown on the slide how should we think about other improvements you hope to drive through your investments in particular thinking about potential automation opportunities in west and east cost savings.

Speaker Change: From the incremental capacity as shown on the slide how should we think about other improvements you hope to drive to your investments in particular thinking about potential automation opportunities in west and east cost savings.

Matthew Keller: Let me start on on the pre finish as you mentioned, it's just remarkable how fast that technology is.

Speaker Change: Let me start on the pre finish as you mentioned, it's just remarkable how fast that technology is.

Matthew Keller: Advancing.

Speaker Change: Advancing.

Matthew Keller: And we started out basically doing prefinished Skunk works. So there was a lot of opportunity for us to increase investment in <unk>.

Speaker Change: Look we started out basically doing prefinished skunk works. So there was a lot of opportunity for us to increase investment and get better throughput and automation and we're certainly doing that and expert finishing.

Matthew Keller: <unk> throughput and automation and we're certainly doing that and expert finishing.

Matthew Keller: Little bit for us as it has been somewhat delayed maybe it's been good because the technology has advanced so much that we've really been able to say significant efficiency gains as we've added capacity. So I think there's way more to come.

Speaker Change: A little bit for us as it has been somewhat delayed maybe it's been good because the technology has advanced so much that we've really been able to say significant efficiency gains as we've added capacity. So I think there's way more to come on the on the export finish side as we continue to scale that business.

Matthew Keller: On the <unk>.

Matthew Keller: On the export finish side as we continue to scale that business we.

Matthew Keller: We are still relatively small in the big picture.

Speaker Change: We are still relatively small in the big picture.

Matthew Keller: Our prefinished manufacturing in and every increment of capacity that we add will be significantly more efficient than our average efficiency gain.

Prefinished manufacturing in and every increment of capacity that we add will be <unk>.

Speaker Change: Significantly more efficient than our average efficiency gain.

Matthew Keller: That's a little bit.

Speaker Change: It's a little bit.

Matthew Keller: There is not quite that opportunity on the press side of the business, though we do have.

Speaker Change: There is not quite that opportunity on the press side of the business, though we do have.

Matthew Keller: Active projects around.

Speaker Change: Active projects around.

Matthew Keller: Automation of our finishing operation, which tends to be high labor and more highly labor intensive.

Speaker Change: Automation of our finishing operation, which tends to be high labor.

Speaker Change: More highly labor intensive.

Matthew Keller: And in cases from a safety standpoint, more hands on that technology is advancing as well, particularly in the packaging area.

Speaker Change: And in cases from a safety standpoint, more hands on that technology is advancing as well, particularly in the packaging area.

Matthew Keller: And so we see opportunities there I think those margins will be more.

Speaker Change: And so we see opportunities there I think those margins will be more.

Matthew Keller: It might be less obvious to see at any one period of time it just part of the overall.

Speaker Change: Maybe a less obvious to see at any one period of time it just part of the overall.

Matthew Keller: Continuous improvement effort and then I'll, just close that by saying one of the most exciting things those.

Speaker Change: Continuous improvement effort and then I'll, just close that by saying one of the most exciting things those.

Matthew Keller: Second.

Speaker Change: Second.

Matthew Keller: Line after after Holton could give us an opportunity to really the first time for us to be designing almost an entire mill footprint.

Speaker Change: Line after after Holton could give us an opportunity to really the first time for us to be designing almost an entire mill footprint.

Matthew Keller: For siding production versus an OSB production line that gets converted.

Speaker Change: For siding production versus an OSB production line that gets converted.

Matthew Keller: And we've.

Speaker Change: And we've.

Matthew Keller: Holton line, two will have some of that element in it but the one after that will most probably be <unk>.

Speaker Change: Holton line, two will have some of that element in it but the one after that will most probably be <unk>.

Matthew Keller: Almost like a greenfield even if it's at a look current location of an existing.

Speaker Change: Almost like a greenfield even if it's at a look current location of an existing.

Matthew Keller: Siding mill and so the opportunity for us to design, specifically the entire footprint of the mill for siding production versus <unk>.

Siding mill and so the opportunity for us to design, specifically the entire footprint of the mill for siding production versus <unk>.

Matthew Keller: Forcing it in on an existing OSB mill is one.

Speaker Change: Forcing it in on an existing OSB mill.

Matthew Keller: To be more capital intensive but the opportunity.

Speaker Change: It would be more capital intensive but the opportunity.

Matthew Keller: And the efficiencies that we can design and will be pretty interesting so more to come as we learn about that but I do see that as an opportunity for another step change in margin at least at that facility when it when it comes online at full production.

Speaker Change: And the efficiencies that we could design and will be pretty interesting so more to come as we learn about that but I do see that as an opportunity for another step change in margin at least at that facility when it when it comes online at full production.

Matthew Keller: Yeah.

Speaker Change: Yeah.

Speaker Change: Thanks, very much I'll turn it back.

Matthew Keller: And our next question.

Speaker Change: And our next question.

Speaker Change: Our next question will be coming from Kurt Yinger of D. A Davidson your line is open.

Matthew Keller: Great. Thanks, and good morning, everyone.

Speaker Change: Great. Thanks, and good morning, everyone.

Kurt Yinger: Just wanted to circle back on Lenoir, and I'm curious as that business has ramped and you've executed against the agreement if there are any.

Kurt Yinger: Its been any surprises or big learnings that you can kind of take and look to leverage as you continue to pursue.

Speaker Change: Its been any surprises or big learnings that you can kind of take and look to leverage as you continue to pursue.

Kurt Yinger: Other larger builders in the space.

Kurt Yinger: But once it does not really any surprises.

Speaker Change: But once it does not really any surprises.

Kurt Yinger: It's been executed as planned you know more or less as normal course of business.

Speaker Change: It's been executed as planned you know more or less is in north normal course of business.

Kurt Yinger: And I guess the.

Speaker Change: And I guess the.

Kurt Yinger: The <unk>.

Speaker Change: The <unk>.

Kurt Yinger: Alerting.

Speaker Change: <unk>.

Kurt Yinger: This is not a learning that surprised us but.

Speaker Change: This is not a learning that surprised us but.

Kurt Yinger: But we've been good at within <unk> is making sure that their contractor basis trained up technically.

Speaker Change: But we've been good at within <unk> is making sure that their contractor basis trained up technically.

Able to install our siding the first time, they do it in a very efficient and.

Speaker Change: Able to install our siding the first time, they do it in a very efficient and.

Kurt Yinger: And beautiful way.

Speaker Change: And beautiful way.

Kurt Yinger: So with the technical support that has gone in to this.

Speaker Change: So with the technical support that's gone in to this.

Kurt Yinger: This conversion.

Speaker Change: This conversion.

Kurt Yinger: Call it that for them has been significant on our part.

Speaker Change: Call it that for them has been significant on our part.

Kurt Yinger: And we understand now that key part of the selling process for the builder is not.

Speaker Change: And we understand now that key part of the selling process for the builder is not.

Kurt Yinger: When.

Speaker Change: When.

Kurt Yinger: The procurement.

Speaker Change: The procurement.

Kurt Yinger: Battle for that business, but then.

Speaker Change: Battle for that business, but then.

Kurt Yinger: Quickly becomes an execution.

Speaker Change: Quickly becomes an execution.

Kurt Yinger: Play around.

Speaker Change: Play around.

Speaker Change: <unk>.

Kurt Yinger: Educating the installer base and making sure that we have local distribution in place to serve every one of their.

Speaker Change: Educating the installer base and making sure that we have local distribution in place to serve every one of their.

Kurt Yinger:

Kurt Yinger: Developments.

Speaker Change: Developments.

Kurt Yinger: There were there were cases, where that was not true with some of the business that we garner from Illinois and other builders that we've won in so.

Speaker Change: Their work there were cases, where that was not true with some of the business that we garner from Illinois and other builders that we've won in so.

Kurt Yinger: It is a it is a.

Speaker Change: It is a it is an execution game once you get the agreement and <unk>.

Kurt Yinger: An execution game once you get the agreement and.

Kurt Yinger: Of course, it was a big one for us.

Speaker Change: Of course, it was a big one for us.

Kurt Yinger: So the learnings there certainly will translate well into how we how we approach.

Speaker Change: So the learnings there certainly will translate well into how we how we approach.

Kurt Yinger: Future opportunities in that area.

Speaker Change: Future opportunities in that area.

Kurt Yinger: Is it fair to think that I mean, given how important kind of that the contract or training or technical details of installation would be that.

Speaker Change: Is it fair to think that I mean, given how important kind of that the contract or training or technical details of installation would be that.

Kurt Yinger: As you grow in scale and you convert some of these bigger bigger builders like the next conversion is a little bit easier because that contract basis just naturally.

Speaker Change: As you grow in scale and you convert some of these bigger bigger builders like the next conversion is a little bit easier because that contractor base is just naturally.

Yep.

Speaker Change: Yep.

Kurt Yinger: More aware of installation and whatnot.

Speaker Change: More aware of installation and whatnot.

Kurt Yinger: No doubt the wider we cast our net and both R&R.

Speaker Change: No doubt the wider we cast our net and both R&R.

Kurt Yinger: And new construction and by the way, there's installers that do both.

Speaker Change: And new construction and by the way, there's installers that do both.

Kurt Yinger: Depending on where the strength of the market is locally.

Speaker Change: Depending on where the strength of the market is locally.

Kurt Yinger: Every every contractor we get we have the opportunity to train up has a contract with now so now knows how to install our product and we believe and have evidence that they become advocates for our product because of the ease of installation.

Speaker Change: Every every contractor we get we have the opportunity to train up has a contract with announced now knows how to install our product and we believe and have evidenced that they become advocates for our product because of the ease of installation.

Kurt Yinger: And there's so there's a stickiness there and then that also translate into.

Speaker Change: And there's so there's a stickiness there and then that also translate into.

Kurt Yinger: This has been a historic for us, but as we grow the business, both R&R and new construction and open up new distribution.

Speaker Change: This has been a historic for us, but as we grow the business, both R&R and new construction and open up new distribution.

Kurt Yinger: You know the channel makes money off our product and so that that creates.

Speaker Change: The channel makes money off our product and so that creates.

Kurt Yinger: Some loyalty and they don't sell what the contractor wants but it does strengthen our overall effort beyond just the framework work about one deal in the case of a builder or that one contract that you convert.

Speaker Change: Some loyalty and they're going to sell what the contractor wants but it does strengthen our overall effort beyond just the framework of that one deal in the case of a builder or that one contract that you convert.

Kurt Yinger: R&R side, so I mean, I mentioned building scale for expert finished but we're also building scale.

Speaker Change: R&R side, so I mean, I mentioned building scale for export finished but we're also building scale.

Kurt Yinger: With distribution and the contractor base.

Speaker Change: With distribution and the contractor base.

Kurt Yinger: It's probably more valuable than the scale you build we build on the operation side.

Speaker Change: It's probably more valuable than the scale you build we build on the operation side.

Kurt Yinger: Okay, Alright, I appreciate the color. Thank you.

Speaker Change: Okay, Alright, I appreciate the color. Thank you.

Kurt Yinger: Welcome.

Speaker Change: Welcome.

Kurt Yinger: One moment for our next question.

Speaker Change: One moment for our next question.

Speaker Change: And our next question will be coming from George Staphos with Bank of America Securities. Your line is open George.

George Staphos: Thanks, very much hi, everyone. Good morning, Thanks for the details.

George Staphos: Thanks, very much everyone. Good morning, thanks for the details.

George Staphos: Given the success with smart side it doesn't sound like you need to make any changes, but does it come a time in the horizon, where the marketing advertising maybe needs to change or changes because of the scale and the acceptance of the product recognizing its right now much more of a technical sell youre working on the installer and Thats been working.

George Staphos: Given the success with smart side it doesn't sound like you need to make any changes, but does it come a time in the horizon, where the marketing advertising maybe needs to change or changes because of the scale and the acceptance of the product recognizing it's right now much more of a technical sale youre working on the installer and Thats been working.

George Staphos: Fine but.

George Staphos: Just fine but.

George Staphos: It does national advertising or something like that ever come into play at this over the next two to three years.

George Staphos: National advertising or something like that ever come into play at this over the next two to three years.

George Staphos: Yes, I would say George for the next two to three years.

George Staphos: Okay.

George Staphos: Yes.

What's been working for us and what we are increasing our investment in <unk> is having boots on the ground with our sales force so so being.

George Staphos: What's been working for us and what we are increasing our investment in <unk> is having boots on the ground with our sales force so being.

George Staphos: Having folks selling actively selling our product every day and supporting that further technical sales discussion with that won't repeat.

George Staphos: Having folks selling actively selling our product every day and supporting that per the technical sales discussion with that won't repeat.

George Staphos: And then from an R&R standpoint, where we've had success is really more focused local markets, where we've gone into areas and where we do consumer advertising, but at a local level and the local basis using local media.

George Staphos: And create and then doing that in places, where we have distribution. We have contractors that have that are on board and then we followed that ground work, let's say that foundation.

George Staphos: Create and then we're doing that in places, where we have distribution, we have contractors that have that.

George Staphos: That are on board and then we followed that grew.

George Staphos: <unk> work, let's say that foundation.

George Staphos: Focused local marketing, we're seeing really really good results and so on.

George Staphos: With focused local marketing, we're seeing really really good results and so on.

George Staphos: So if the markets change.

George Staphos: So the Mark markets change.

George Staphos: Over the years my opinions have changed but I do think that this is more of a local selling.

George Staphos: Theres more value more return on local selling local brand awareness than there is on national programs I'll start my personal view.

George Staphos: But there is more value more return of local selling local brand awareness than there is on national programs. That's my personal view.

George Staphos: But in it and it can be changed with evidenced otherwise that it could we could accelerate growth with more of a national.

George Staphos: But.

George Staphos: And it can be changed with evidenced otherwise that it could we.

George Staphos: We could accelerate growth with more of a national.

Branding opportunity, but.

George Staphos: Branding opportunity, but.

George Staphos: I like what we're doing locally and it's really been something that we've seen the results of.

George Staphos: I like what we're doing locally and it's really been something that we've seen the results are as we as we've executed that.

As we've executed that.

George Staphos: And it's working on at the same time, you have to stage it with your ability to produce and meet the demands.

Speaker Change: That all makes sense.

George Staphos: That all makes sense.

Yes exactly.

George Staphos: Yes exactly.

Speaker Change: I'm sorry, Alan do you have a comment there.

Speaker Change: And I'm sorry, Alan do you have a comment there.

Speaker Change: No I agree with you.

George Staphos: Nope.

George Staphos: And with you.

Speaker Change: Sounds good.

George Staphos: Sounds good in terms of the next line.

Speaker Change: In terms of the next line.

Speaker Change: What are the lead times, such that if you're going to be producing around 2029, you need to actually start to have the orders in place to the equipment dealers and what kind of inflation.

George Staphos: What are the lead times such that.

George Staphos: If you're going to be producing around 2029, you need to actually start to have the orders in place to the equipment dealers and what kind of inflation.

Speaker Change: Inflation, maybe or maybe not are you seeing in terms of press capacity versus what we've seen in the past per thousand square feet.

George Staphos: Inflation, maybe or maybe not are you seeing in terms of press capacity versus what we've seen in the past per thousand square feet.

Speaker Change: Yeah. So let me just kind of give it.

George Staphos: Yeah. So let me just kind of give it up.

Speaker Change: A comment on where we're at.

George Staphos: A comment on where we're at.

Aaron Holwell: Aaron can comment kind of.

George Staphos: Aaron can comment kind of how.

Speaker Change: What we're seeing for us down the road, but we've started.

George Staphos: What we're seeing for us down the road, but we've started.

Aaron Holwell: Securing.

George Staphos: Securing.

Aaron Holwell: Pieces and parts of what we need to do.

George Staphos: Pieces and parts of what we need to do.

Aaron Holwell: Hosting one on one and actually for.

George Staphos: Hosting one on one and actually for.

Aaron Holwell: Equipment orders that we could follow up that we could place that are.

George Staphos: Equipment orders that we could follow up that we could place that are.

Aaron Holwell: Location agnostic that has that has begun we've got preliminary approval, we got approval from our board for Holton, but preliminary approval from the board to start the pre buys let's call it securing.

George Staphos: Location agnostic that has that has begun we've got preliminary approval, we got approval from our board for Holton, but preliminary approval from the board to start the pre buys let's call it securing.

Aaron Holwell: Factory time, and fabrication time or steel and in some cases, beginning the fabrication of the equipment. So that has started.

George Staphos: Factory time, and fabrication time or steel and in some cases, beginning the fabrication of the equipment. So that has started.

Aaron Holwell: The inflationary impact has been significant over the past couple of mill conversions Holton to go with this one.

George Staphos: The inflationary impact has been significant over the past couple of.

Mill conversions Holton to go and now this one.

Aaron Holwell: We're not seeing it.

George Staphos: We're not seeing it.

Increases in inflationary issues, there other than what I would say more normal but compared to what it cost to do these projects.

George Staphos: Increases in inflationary issues, there other than what I would say more normal but compared to what it cost to do these projects.

Aaron Holwell: Pre COVID-19 is significantly more expensive.

George Staphos: Pre COVID-19 is significantly more expensive.

Aaron Holwell: And then I think Aaron can speak more to the specifics of where we are on the two projects and what we are seeing yeah.

George Staphos: And then I think Aaron can speak more to the specifics of where we are on the two projects and what we are seeing yeah.

Aaron Holwell: Inflation is certainly a factor, but the nature of the projects are also changing so.

George Staphos: Inflation is certainly a factor, but the nature of the projects are also changing so.

Aaron Holwell: The Golar and houlton were conversions of existing plants.

George Staphos: Golar and houlton were conversions of existing plants.

Aaron Holwell: The hold on line two as an expansion.

George Staphos: The whole online twos and expansions.

We're not converting a press, we're actually adding a press so the nature of the products also the nature of the projects themselves can drive some some changes in the total cost Fortunately the other thing that's inflating assigning price. So the cost of the projects go up but the returns stay very healthy because we've got pricing power for the specialized product that were producing at those mills.

George Staphos: We're not converting a press, we're actually adding a press so the nature of the products also the nature of the projects themselves can drive some some changes in the total cost.

George Staphos: The other thing that's inflating assigning price so the cost of the projects go up but the returns stay very healthy because we've got pricing power for the specialized product that were producing at those mills.

Aaron Holwell: In terms of timing as Brad said, you know some of the items are our longer lead time inside agnostic and so it makes sense to secure that capacity now because there's not a huge amount of production capacity for some of these specialized pieces of equipment.

Speaker Change: In terms of timing as Brad said some of the items are longer lead time inside agnostic and so it makes sense to secure that capacity now because there's not a huge amount of production capacity for some of these specialized pieces of equipment.

Aaron Holwell: And and we're pretty confident that if we continue to grow with a historical volume CAGR that we've seen over the past several years that we will have capacity ready.

Speaker Change: And and we're pretty confident that if we continue to grow with a historical volume CAGR that we've seen over the past several years that we will have capacity ready.

Aaron Holwell: In time that we minimize the risk of another extended period of a mandatory file.

In time that we minimize the risk of another extended period of a managed order file.

Speaker Change: Understood My two last questions and I'll turn it over.

Speaker Change: I wouldn't expect it would be a factor, but you didn't really call it out but with shed growing a little bit more quickly. This year is that any kind of impact on the margin trend.

Speaker Change: Is it would it.

Speaker Change: Maybe take a few basis points off of margin because of mix and then in terms of maintenance can you remind me are there any.

Speaker Change: No specific cadence factors, we should.

Speaker Change: Specific cadence factors, we should be considering as we're modeling out the quarters. Thank you very much.

Speaker Change: Considering as we're modeling out the quarters. Thank you very much.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: It would be that tends to be lower than average price, but not lower than average margin. So it's not a margin hit.

Speaker Change: Would be that tends to be lower than average price, but not lower than average margin. So it's not a margin hit.

Speaker Change: Pricing.

Speaker Change: Our pricing.

Speaker Change: And then quick.

Speaker Change: And then what.

Speaker Change: As always Q4 will be the heaviest in terms of maintenance projects and spending George Yeah, and we've got a few projects. This year that are maybe a little larger than normal but they are they're in the OSB business on the siding business. So you won't see you won't see large maintenance projects being.

Speaker Change: As always Q4 will be the heaviest in terms of maintenance projects and spending Georgia.

Speaker Change: And we've got a few projects. This year that are maybe a little larger than normal but they are they're in the OSB business on the siding business. So you won't see you won't see large maintenance projects being a.

Speaker Change: Source of perturbation in the siding market in this year knock on wood.

Speaker Change: [laughter], thanks, very much good luck.

Speaker Change: Yes.

Speaker Change: Thanks, very much good luck.

Speaker Change: Yes.

Speaker Change: Et cetera.

Speaker Change: Thank you and Im showing no further questions I would now like to turn the conference back to Erin for closing remarks.

Speaker Change: And Im showing no further questions I would now like to turn the conference back to Erin for closing remarks.

Speaker Change: Okay. Thank you everyone for joining us with no further questions. We'll end the call there stay safe and come and see US next week in Vegas, and see some of the new products that we.

Speaker Change: We were talking about driving our growth in 2025.

Speaker Change: And this concludes today's conference call. Thank you for participating you may now disconnect.

Q4 2024 Louisiana-Pacific Corp Earnings Call

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