Q1 2025 Louisiana-Pacific Corp Earnings Call
Good day and thank you for standing by [inaudible]
Welcome to, excuse me, welcome to the Q1 2025 Louisiana Pacific Corporation Earnings Conference call.
At this time, all participants are in a listen-only mode George Staphos, Susan Maklari,
After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone.
You will then hear an automated message if I think that your hand is raised. To withdraw your question, please press star 1-1 again.
to be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Aaron Hobel, VP of Investor Relations.
Thank you, operator, and good morning, everyone. Thank you for joining us to discuss LP's results for the first quarter of 2025, as well as our updated outlook. On the call with me this morning, our Brad Southern LP's Chief Executive Officer, and Alan Haughie LP's Chief Financial Officer. After prepared remarks, we will be happy to take a round of questions. Thank you very much.
During this morning's call, we will refer to a presentation that has been posted to LP's IR webpage, which is investor.lpcorp.com Our 8K filing earnings press release and other materials are also available there.
As always, I will caution you that today's discussion contains forward-looking statements and non-GAAP financial metrics as described on slides two and three of the earnings presentation.
The appendix of the presentation also contains reconciliation that are further supplemented by this morning's 8K filing Rather than reading those materials I will incorporate them here in by reference and with that I'll turn the call over to Brad
Brad Southern: Thanks Aaron, and thank you all for joining us today to discuss LP's results for the first quarter.
Speaker Change: As you all know, 2025 began volatility and disruption in the US and Canadian economies.
Speaker Change: The same factors also contributed to a softening and commodity I would speak prices.
Speaker Change: Against this backdrop, LP Sighting Business continues to grow, expand margins, gain share and realize higher prices We also introduce new and more specialized products in the quarter that will add energy to the growth flight well [inaudible]
Speaker Change: While we are watching the macro backdrop closely, we see no signs of a slowdown inside him. In fact, our order follows robust and remains on track for a record second quarter.
Speaker Change: As a result, we are raising our full-year outlook for sighting as Alan will detail in a few minutes
Alan Haughie: Page 5 of the presentation shows of summary of financial highlights for the first quarter.
Alan Haughie: That sales in the quarter was $724 million. This is flat to prior year as 11% growth and signing offset lower OSB prices.
He Bedal was down $20 million dollars.
Alan Haughie: The oversimplified bid lower OSB prices all flow through to EBITDA. Insighting growth has about a 50% incremental EBITDA margin, so a $20 million EBITDA impact from these offsetting revenue changes is about what we would expect.
Alan Haughie: However, OSB prices are temporary and our goal is to make siding growth permanent. Siding growth means leverage that drives margin expansion. Our siding business delivered at 26% EBITDA margin in the first quarter, and we expect more of the same in the second quarter.
Alan Haughie: If you were able to join us in Las Vegas for the International Builder Show, you might have seen our newest and most specialized hiding product.
Alan Haughie: At IBS, we introduced the two-tone expert-finished products we are calling our natural collection, which is designed to capture the look of stained wood.
Alan Haughie: Or both the split six different pre-finished color combinations, each of which is available in both Cedar and breast smooth finishes. This new collection complements are existing 16 color power and adds a new aesthetic while still delivering industry leading durability and ease of installation.
Alan Haughie: We are early in the rollout, but customer response has been very enthusiastic and enthusiastic.
Alan Haughie: About 14% of our volume in Q1 was from recently launched products, including about 10% of volume from Expert Finish. These products drive growth and contribute a positive mix effect on price. We are confident that our new product development pipeline will continue to contribute to growth, material conversion, and share gain from smart side.
Brad Southern: Before I turn the call over to Alan, I know terrors are top of mind, so let me discuss them briefly.
Brad Southern: The EBITDA impact the terrace in the first quarter was about $2 million for siding.
Brad Southern: This was primarily from a territory terrace imposed on U.S. made products exported to Canada.
We also saw some small impacts on imported raw materials [inaudible]
Brad Southern: If the current tariff regime continues through year-end, sighting would see an EBITDA impact of about 12 million dollars. This is the assumption we are making for the purpose of updated guidance.
Brad Southern: We won't speculate about what changes or new tariffs might be announced in the future, but we can affirm what we have said in the past about the paused 25% tariffs with Canada.
Brad Southern: LP products for USMCA compliant, making them exempt from U.S. terrorists.
Brad Southern: If that were to change, which we do not anticipate, we have numerous contingency plans, including flexibility in our supply chains and our operating network.
Brad Southern: None of that would make us immune from terrorists, but we are confident that we could partially mitigate tariff impacts if the situation changes. Meanwhile, we remain focused on what we can't control. Safety, efficiency, product innovation, share gains, growth, leverage, and margin expansion.
Brad Southern: In a very uncertain environment, the LP team kept their focus and executed our strategy with agility and determination. OSB prices have softened in recent weeks, but as I said a moment ago, our siding order file remains quite strong.
Brad Southern: I want to take a moment to express how proud I am of our team members and to thank them for their efforts and dedication.
Brad Southern: I'll conclude by saying that I am very confident that I'll reach an integration of the businesses under a CCO, COO structure, reporting the Jason Ringbloom in his new role as L.P.'s president, positions L.P. for many more years as strategic continuity and execution. .
Alan Haughie: With that, I will turn to Alan for an update on the segment results, cash flow and our updated guidance before we take her questions.
Alan Haughie: Thanks, Brad. Pages 8 and 9 of the presentations show the first quarter year revenue in EBIT dub ridges. Both are fairly straightforward, but a few factors best on discussion. For citing on page 8, 9% higher volumes and 2% higher prices compounded for 11% revenue growth.
Speaker Change: Volume growth actually outperformed single-family starts on the quarter by 15 points, consistent with ongoing material conversion and share gains, boosted by robust demand for panel
Speaker Change: Police shared customers are experiencing what appears to be a sustainable recovery after a long period of demand following the surge they experienced during COVID.
Speaker Change: I should also mention that although the margin on panels is healthy, they are priced below Laptrim and Soffit.
Speaker Change: So while panel growth boosted volumes and helped with margins, it also brought a negative price mix effect that offset the positive mix effect from higher expert finish. In other words, please don't infer any slow down in expert finish from the softer year of year price growth.
Speaker Change: On the contrary, the first quarter set records for both volume and revenue in expert finish.
Speaker Change: Other variances in the quarter were minor, with a five-million-dollar increase in selling and marketing spend and minor variances in labor, raw material costs and freight net into zero.
Speaker Change: So, for siding, despite the tariff-induced market volatility, it was a solid quarter for pricing power, growth, share gains, operating leverage, and therefore for margin expansion. And that trend continues into the second quarter, in which siding orders are on pace to set new records for both volume and revenue.
Speaker Change: For OSB on page 9, the bridge is dominated by commodity OSB price fluctuations as is so often the case.
Speaker Change: Lower prices resulted in a $32 million reduction in revenue in EBITDA.
Speaker Change: A mixed shift from structural solutions to commodity, which is not uncommon in soft-dose B markets resulted in a net reduction of $30 million in revenue and $7 million in EBITDA, compared to the prior year. And just as with the sliding segment, all of the variances were quite minor by comparison.
Page 10, sure is cashflow for the quarter . . .
Speaker Change: As you will recall, we typically use cash to build working capital in the first quarter, primarily logging entry to prepare our mills for the spring break up, and worker capital increases consumed about $74 million, with taxes, interests and other costs combining for a further $24
Speaker Change: We invested $64 million in capital projects, spent $61 million to purchase shares and pay $20 million And this brought our ending cash balance to $256 million
Speaker Change: Having recently expanded our revolving credit facility to $750 million, which I should add is completely undrawn, LP had a billion dollars in liquidity at the end of a quarter.
Speaker Change: And to save you the trouble in Q&A, no, we're not planning to borrow from the expanded revolver to fund share repurchases. We will continue to earn the cash, investing growth and return cash to shareholders in that order.
Speaker Change: which brings me to LP's updated guidance on page 11. I've already stated more than once, commodity prices have softened recently, while siding appears to be on track for a record
Speaker Change: We anticipate the over-year revenue growth in the 9-10% range for siding, generating between $445 and $455 million in revenue.
Speaker Change: An EBITDA margin of about 26% implies EBITDA between $110 and $120 million [inaudible]
Speaker Change: These results would not only be records for revenue and EBITDA, but would also exceed the volume records set during the peak of COVID-19 demand, a year that saw almost 1.6 million housing starts in the US.
Speaker Change: For the four-year, we know it's exciting rather than you of about $1.7 billion an EBITDA between $4.25 and $4.35 million.
Speaker Change: We're applying the same philosophy to our tariff assumptions as we did in our first quarter guide three months ago, namely that the current state continues to the remainder of the year, a state which leads us to respect roughly $12 million of tariff headwind in Ibadar.
Speaker Change: Despite this, we've increased the midpoint of our guide by $10 million, which can be thought of as a $22 million increase in EBITDA from growth and leverage partly offset by the $12 million of tariff impact.
Speaker Change: OSB, with random links falling recently, a prudent modeling approach will be to assume that commodity OSB prices remain flat at last Friday's level for the remainder of the year, which is exactly what we've done.
Speaker Change: So with that assumption, the second quarter OSB EBITDA should be in the $15 to $25 million range.
Speaker Change: yields a full-year EBITDA estimate for OSB of $110 or $120 million. Now for the avoidance of doubt this is not an attempt to predict actual commodity prices, but simply a conservative approach that we hope is useful for modeling.
Speaker Change: So in summary, it was a surprisingly clean quarter given the noisy and turbulent market backdrop, and while consumer sentiment and commodity prices have been pressured by tyre from certainty, our siding order file seems to be weathering the storm nicely so far.
Speaker Change: and with that I'd like to open up the call for Q&A. Operator?
Thank you.
Speaker Change: At this time, there will be a meeting session to ask a question during the session. You will need to press star 1-1 on your telephone.
and Aaron Howald. Thank you. Thank you.
Speaker Change: You will then hear an automated message, it's advising that your hand is raised.
Speaker Change: To withdraw your question, please start 1-1 again.
Please be advised that today's conference is being recorded.
Please stand by, where we compile the Q&A roster.
Speaker Change: Our first question today is from Ketan Mamtora with BMO Capital Markets. Their line is open.
Thank you and congrats on a strong border inciting.
Speaker Change: Maybe to start there, can you talk about sort of, you know, two or three key, you know, drivers for this, you know, outperformance versus single family starts? And if you can just talk about how the RNR piece of this demand is also holding out. [inaudible]
Speaker Change: Ketan, be glad to answer that. Thank you. Really, we have seen strength in the Q1s. I'll strengthen the quarrel so our entire order file, if there was any.
Speaker Change: Weakness at all, it was at the home centers in Q1 in the U.S.
Speaker Change: We saw a particular improvement in shed orders compared to Q1 of last year where we had a pretty weak Q1 so the comp there was kind of easy.
Speaker Change: But in order to, you know, hit the numbers that we did, we did see, you know, strengthen both the R and R sector.
Speaker Change: and then a little bit of a surprise at our new construction and normal two-step distribution business.
Speaker Change: held up really well as well. So, it really wasn't across the board strength in the order file with particular strength on the shed side, as Alan mentioned with the panel
Undisturbed, and just as my follow-up
Speaker Change: It's how do you feel sort of about inventories in the channel at the moment given for the uncertainty around tariffs and just the macro backdrop.
Speaker Change: As you look at both the home center channel and the pro channel, how would you characterize in memories and this is specifically to kind of siding.
Speaker Change: What we are pretty sure happened in Q1 was they pulled down in the Tories because we know that the cell through
for our products at the home centers was...
Was good
Speaker Change: The bill are in type of orders and Q1 wasn't so there was inventory pull down at the home center so now I would call those normal.
and then in the channel, I'm
Speaker Change: You know, it's seasonally where it needs to be given the fact that spring is wrecking across the country, so I mean a little high-
Speaker Change: Compared to an annual number, but right where we like it to be as far as the seasonality. And some evidence of that is we're prompt on our order following sighting, so there's not, you know,
Speaker Change: Distributors are able to get shipments by depending on the skew in two to three weeks, so there really isn't a need for distribution to build inventory because of our prop delivery given the fact that Seagull was running so good now.
Speaker Change: So we feel good about inventories as it relates to the siding and I'll go ahead and answer two on the OSB side They may be a little lean right now given the movement on pricing
Speaker Change: So I would say overall the inventories and for both products or where they need to be are a little light in the case of OSB.
Speaker Change: Thank you, that's very helpful. I'll jump back in the queue Thank you.
Thank you, Kate.
Thank you.
Speaker Change: Our next question is from Michael Roxland with Tourist Security. Your line is open.
Michael Roxland: Yeah, thank you all Brad Allen and Aaron for taking my questions and I'll just back go about Ketan's two comments, so be rats on a very good quarter despite the backdrop.
Thank you. Thanks Bob.
Speaker Change: In terms of your siding margin, I want to give a sense of how we should think about the progression of that margin in the back half of the year, maybe, into 2016, particularly as you're expanding hope in your pursuing a second investment.
Speaker Change: Your guides also seem to imply some margin weakness relative to one age, and I can just speak in conservatism or cautiousness, I get that. But I shouldn't sign margins as you compare hoping to tend to trend down, and if so, when do you expect that to take place? [inaudible]
Speaker Change: Aaron Howald. Thanks so much for joining us. We'll see you next time.
Speaker Change: Let's call it the reason for what is seen as margin conservatism. So there's no...
Speaker Change: Yes, we all other things being equal. We should see some margin expansion in 2026 because there'll be no material impacts on the profit side from the investments in the new capacity. They won't be hitting until at least 2027.
Speaker Change: Got it. I appreciate that. Thank you. And then just one quick follow-up on OSB, obviously, a capacity continues to be ended there.
Speaker Change: You're the peer list that is now looking at any addition to any capacity in Canada, maybe considering a new facility in Alabama.
Speaker Change: You're thoughts around OSB, you know, maybe shift the more value out of the commodity, maybe try to expedite the shift away from, or just in general try to shift away, continue to shift away from OSB into Siding. Any thoughts you have about OSB and the competitive dynamics, thank you.
Speaker Change: Yeah, so obviously the competitive dynamics we're playing out right now in a, you know, somewhat weaker housing market than we wish we had this time of year in this year, and as you mentioned, Mike, with the capacity that came online.
Speaker Change: Last year that's certainly being felt in the market right now and is showing up in pricing.
Speaker Change: You know, I'm still bullish on always paying the long run if we can, as housing recovers.
Speaker Change: We're well positioned given both our structural solutions and the bit of the commodity that we still manufacture to be a very efficient supplier with a really wide network that's appealing to the National Builders.
Speaker Change: We are at one of those times right now where the industries happen to absorb some new capacity at a time of relatively weak demand.
Speaker Change: and that leads to conservatism and distribution. It will take an inventory because they can get prompt orders and prices have been following.
Speaker Change: and so we're having to ride through that over the next little while, but I'm still like the OSB for the OSB business that we have today for the long run, but as you mentioned, our focus is going exciting.
Thank you Mark.
Thank you for your question.
Speaker Change: Our next question is from Steven Ramsey with the Thompson Research Group. Your line is open.
Speaker Change: Hi, good morning. I wanted to think about the order file a bit.
Speaker Change: and how much of the success in your order file reflects marketing investments. If you think it reflects 2023 spending or more recently in 2024, just trying to gauge the success of that investment in the time lag from spend to bearing fruit.
Speaker Change: Yeah, so listen to the investment we've made in repair and remodel reciting.
Speaker Change: Emphasis that expert finishes brought to us has been alone.
Speaker Change: Spend, really, you know, we started ramping up when we got off the allocation for COVID when we started to have, you know, the extra capacity to sell.
Speaker Change: That investment has been strategic, it is ongoing, and we are seeing the fruit of that in the expert finish order file and other products that get pulled along with that.
Speaker Change: That will be, you know, that's not a one-time slug of...
Speaker Change: Marketing and sales ads that you do, and then you back away from it to be successful in repair and remodel. You have to have a brand, you have to have a presence, and you have to be top of mind when it comes time for a re-side project.
Speaker Change: and so I'm encouraged by the progress we've gotten off of that investment and we will continue to invest to drive growth there.
Speaker Change: You know, marketing, not so much a factor in new construction where it's more about, you know, working directly with the builders and the contractors to get, you know, to get the product trialled, but for the DIY and on our sector, you know, that's investments that we're starting to see good returns off of.
Speaker Change: Let me add too that I think a key driver to the order file. It's also been our investment. We're going in.
Speaker Change: What, six years ago we didn't have a pre-finished product and now we have naturals that have just been launched, you know, the next phase of that.
Speaker Change: and that's really opened up, made the accessible market for us much, much bigger.
Speaker Change: and I'm really, really proud of the progress we've made there, the very innovative way we've approached.
Speaker Change: The adaptability of our substrate to meet the needs of the homeowner or contractor of the contractor.
Speaker Change: and if you want to look ahead, I'm confident that as long as we continue to make these market advancements and become more of a known brand in the U.S. and also continue to develop the portfolio, there's a lot of headroom for continued growth in our Smart Side product line.
Speaker Change: Okay, that's helpful color, and maybe this question builds on that topic that you were just discussing, Brad, which is the citing growth being so far above housing.
Speaker Change: The backdrop, at least more recently, and longer term, I get that some of that is shed coming back but with expert finish making up a larger portion of volume ensailed. [inaudible]
Do you think the siding business decouples?
Speaker Change: from starts when you think about the contrasting correlation, maybe some of that depends on build or series success. So I'm curious pulling up the sighting outlook and how it compares housing and your long-term correlation and if it's changing. So I'm going to take a look at what you're going to see in the next video.
Speaker Change: It's a great question, Steven, so look, you know, we've got about two-thirds of our, we estimate about two-thirds if it's more side doesn't go into, into the construction now.
Speaker Change: and so that you talk about shared or paired with the cum center business and other things so that is certainly insulated from
Speaker Change: It's not new home construction related, but I will say I think certainly part of the strength in our order file even though new home construction is down
Speaker Change: We're gaining market share in new home construction because of our Builder Series product innovation that we've launched right after the COVID.
Speaker Change: and that market share gained in new construction. It was kind of all upside for us because we were relatively weak there up to five years ago. So if you take the
Speaker Change: Two-thirds of our business is not associated with new construction and the one-third that is in the market share opportunities we have to gain there.
Speaker Change: You know, that's worked out really good from the first half of this year, those two things. So, you know, and I've talked a little bit on the call already about repair and remodel and innovation, but I really see a lot of upside for us.
Speaker Change: and New Construction as well as our Builder Series Product Line Gang's credibility. We gain access to those some new lumber yards and distribution opportunities. We'll continue to grow there as well.
Speaker Change: and there's a lot and we're still in the big picture have relatively low market share with the large national builders.
That's great, Taylor. Thank you
Yep.
Thank you.
Speaker Change: Our next question is from Susan Maklari with Goldman Sachs. Your line is open.
Susan Mcclary: Thank you. Good morning everyone and thanks for taking the questions.
I want to throw it on the siding side of things.
Good morning.
Speaker Change: Susan, we've implemented a price increase effective January 1. We got it, we feel like it was fully implemented by February 1.
Speaker Change: And then on the mix side, as Alan mentioned, the strength and shared
Speaker Change: Was a negative to pricing in Q1? We see that somewhat normalizing in Q2, but we could get an uptick on retail home centers which is also panel so it can have a lower price impact. [inaudible]
Speaker Change: So, you know, all about being equal, I think the expert finish improvement is going to be kind of continued to be offset by the strength on the panel side of our business and I don't know if you want to add anything to that. I would like to think that the Q2 year of year price will be a touch higher than Q1. [inaudible]
Brad Southern: with the net of all those factors of the bread outline being slightly to the upside.
over the coming quarters.
Brad Southern: Susan, you've hit on it the affordability issue right now is an overriding issue from the builder or top of mind issue might be not overriding with top of mind issue.
Brad Southern: and that tends to, you know, be negative to our mixed structural solutions.
We're still continuing to invest and to sell into that.
Brad Southern: But right now, it's a tougher sale than it is in a market on OSB.
Brad Southern: We're totally focused on that strategically and trying to drive structural solutions growth. We are facing a headwind when we're in a relatively down market in OSB with all this extra capacity that's come on this year.
Brad Southern: We will hopefully see and prove it in the second half, but I wouldn't be back in that end to, you know, significantly any forecasting that I was doing for the rest of this year.
Speaker Change: Okay, thank you for all the color, guys, and good luck with everything.
Okay, thank you, Susan [inaudible]
Thank you
Speaker Change: Our next question comes from Sean Steuart with Katie Cowan. Your line is open.
Sean Stewart: Thank you, good morning. Just one question. We've seen a private competitor on the OSB side delay.
Sean Stewart: A conversion project for an OSB male, and they are citing steel cost inflation and other inflation tied to tariffs as part of the rationale. I think last quarter you guys laid out.
Speaker Change: Let me speak to this strategically. I mean, to me, Sean is very different. We think of it as a very different investment decision between [inaudible]
Speaker Change: We're generating demand, which, you know, per an earlier answer, sales and marketing spend ahead of to try to drive that demand.
Speaker Change: and we've also got stability of margins, so the ability for us to continue to invest from a capital standpoint inside the highest priority we have in the company.
Speaker Change: and while the higher it costs to do one of these, the lower the return by definition, these projects and the Hilton Project in particular still has a nice return, well above our cost to capital. [inaudible]
Speaker Change: and then I'll see it, Alan, there are about how much has already been locked in, because I don't know that top of my mouth. Some of that. Some of that. Some have not. But the majority is still. They're still faithfully open. Still open. But I echo Brad's point. I think the.
Speaker Change: The message to take away from this, that it would take a hell of a lot of change for us to lose our nerve on our, excuse me on our siding, on accelerating capacity for us.
Speaker Change: My biggest fear is that no matter how fast we go, we'll be too late. Oh, late. Let's say not too late. That's somewhat terminal. We'll be late. Later than I would want us to be. So it is for steam ahead.
Speaker Change: We got it. That's the funeral context. Thanks very much guys, it's all happened out.
Thank you, Sean.
Thank you
Speaker Change: Our next question is from Mark Weintraub with Seaport Research Partners. Your line is open.
Speaker Change: I think it's a different thing. I was too excited to continue to do great. I'm so excited to be the attention of the computer to what is going as far as you're breaking up pretty badly. We can't understand quite.
Sorry, Mark Weintraub.
Speaker Change: We can hear you, but it's very badly distorted and broken up. Could I ask you to drop off the call? Call back in. We'll put you back in the queue. Hopefully we'll have a better connection.
I will do that completely better now.
No, get to the same You
Okay, we'll get you back.
Speaker Change: Operator, let's move on to the next one and then bring Mark back when he logs back in, please.
Speaker Change: I'm sorry, we'll pick a question now from Matthew McKellar with RBC Capital Market.
Matthew McCuller: Good morning. Thanks for taking my questions. I think you mentioned a record quarter for extra finish, please correct me if I had that wrong. Could you please share any updated perspective on how margins and extra finish are trending relative to the rest of the siding business with us?
and Chris Ware for The Real Historic Westport.
I can't. They still have a way to go. Again, if, if
Matthew McCuller: If this business was at any kind of maturity then that would be a concern to me but given its growth rate.
That's not a concern, but...
Matthew McCuller: You should take that as a positive sign for the future improvements in EBITDA margins, as in fact, we raise the margin I expert finish. So, no, the expert finish, price seems great, but the margin is still a slight drag.
Matthew McCuller: And I've said before, it's, I hope it doesn't sound too political, but I am very confident in LP's ability to ultimately bring those margins on to something close parity with the rest of the business on average, but currently, yeah, they're below it, which is an opportunity.
Great. Thanks for that.
Speaker Change: And last for me, one of your citing competitors announced a deal with the composite decking manufacturer. Do you think this transaction affects the competitive landscaping or excuse me, competitive landscape, inciting at all as the companies come together and there's any kind of response, you know, be contemplating to this development. Thank you very much.
Speaker Change: We are very pleased with the market share gains we've made over the last decade in all aspects of our exciting business.
Speaker Change: We are confident in the product that we have is the best quality product on the market. We have very high value proposition and we...
We're she-no [inaudible]
Risk
A new risk associated with
Speaker Change: with the transaction you're talking about. I mean, it's a competitive environment out there, and we're fighting it out every day, but we have a long runway for growth, except for the panel business, we're at low-market share, both in repair and repair model and large-builder new construction.
Speaker Change: We're focused on what we can execute and very confident we'll continue to have success across the board.
Thanks very much, I'll turn it back [inaudible]
Thank you.
Speaker Change: We are now rejoined with Mark Weintraub from C-Port Research Partner.
Thanks, can you hear me any better?
Speaker Change: Much better. Sorry for the technical issues, Mark. However, I'm sure the line will go bad again if we get a difficult question. We'll see you together. That's not going to happen, although it was actually the question that just got asked. That's not the case. I'm going to follow up on it, which is...
Speaker Change: Now, you at one point talked about the possibility of adding another leg to your business as well, and I mean, it's...
Per the last question. Is there a belief?
Speaker Change: Decking customers and citing customers often are doing the renovation at the same time and that that can be helpful. Do you have a perspective on that and are there things that could is that something that sort of. [inaudible]
Speaker Change: in your short list to find other opportunities that maybe would be helpful to growing your
Speaker Change: So, let me just ask, I'm going to ask Antirit specifically and then a little bit more generally. So, we haven't...
Speaker Change: We haven't recognized the correlation between someone that wants to install a deck also wants to reside their house. So that's not something in our discovery that we've run across.
on a more general answer to the question.
Particularly as it pertains to new construction [inaudible]
and Retail, Home Centers. We have scale.
Speaker Change: and our company. We have the second largest OSB manufacturer in the world, and we have the most exciting offering, exciting products in the world, in our opinion as well. And so, you know, which has something to do to this.
Speaker Change: Reorganization that we did where we believe, bringing that power, or we have discovered that bringing that power consciously to the market does drive success and it helps us execute our strategy.
Speaker Change: So we have the scale that maybe others are looking for to be a to be a key presence, you know, in the markets that we play in.
Speaker Change: I'd rather be partnered with, as a siding manufacturer, partnered with an OSB business than almost anything else that I could think of. So when you talk about the third leg of the stool, that's not where we're focused from an MNA perspective.
Speaker Change: You know, the deals that we look at and we look...
Speaker Change: Arsiting Business to allow us to either grow that or our structural solutions business at a higher rate. That would be the things that would make sense for us.
Speaker Change: Very helpful Brad, thank you. On the Section 232 investigation, everybody talks about it relative to lumber. Do you know, does that have any implications for OSD or siding depending on outcome?
I don't think so, no [inaudible]
Okay, Sean Steuart, thanks
Thank you.
Thank you.
Speaker Change: Our next question comes from Jeffrey Stevenson with William Capital. The line is open.
Jeffrey Stevenson: Thanks for taking my questions today and congrats on my nice quarter.
Speaker Change: I wanted to follow up as well on the potential merger of your largest sighting competitive mention of prior questions. Do you think Brad, their potential near-to-mid term sighting share gained opportunities on the margin due to complexities around the integration and channel partnerships of the combined company? [inaudible]
Speaker Change: We are aggressively pursuing market share growth across the board and so I don't know if that I can't comment on how much this would help us for those market share gains but we are relentless on getting them.
Speaker Change: and we'll take any help we can get. I don't know specifically. We have not had a conversion to date because of the announcement, but obviously...
Speaker Change: We're being aggressive and we'll continue to be aggressive as we sell into this market.
Speaker Change: Great, let that make sense. And then it's, you know, good to see the recovery and shut the man and just wonder if you think this is more of case right now of easy comparisons or do you believe it's a start of a sustainable recovery and a market demand.
Speaker Change: No, I think it's always nice, it's nice 12 months later to have easy priors to compare against, but I do think it's a recovery
Speaker Change: We see this in softening markets for housing that the shed demand tends to go up as people make a very general statement.
Speaker Change: But the need for space, and so I'm not surprised given the overall macro economics right now of the US economy to see Shed coming back the way it has. And I do think for a while it will be sustainable. This isn't just an inventory player, anything like that. The order files really strong across the board there. [inaudible]
Great, thank you.
Welcome.
Thank you!
Speaker Change: Our next question is from Kurt Yinger from D.A. Davidson. Your line is open.
Great, thanks, and good morning, everyone.
Speaker Change: Just one question on going back to new residential market share. I think at this point, you know, the top 10 publics are about 40% of the new home market, you know, Brad, you kind of alluded to. Historically, your share on the kind of new resi side has been...
you know, largely dominated by the smaller builders.
Speaker Change: I guess is there like a multi-year target you have in terms of kind of specifically penetrating?
Speaker Change: That subset, I don't know if you want to stratify it as top 10 or top 50 or whatever, but I was hoping you could talk to that as well as you know in terms of converting that shares, it's something that
Speaker Change: You would expect to come in chunks, or is it really a region by region battle and still show up in more of a smooth share game fashion?
Speaker Change: You know, it's chunkier than repair and remodel, because repair and remodel is just a grind, you know, to get to get incremental share and
It kind of comes steady but slow and slow.
Speaker Change: with a larger build or it is program related so you either get some of the volume or you don't or you get...
Aaron Haughie: Path of what you ask for, or you don't, and so it can be kind of chunky, but you know, after you get past the top three or four or five big builders...
It probably won't make me- [inaudible]
Aaron Haughie: Manifest itself kind of smoothly because we'll be, you know, adding volume to the portfolio program by program. These programs run different time periods as far as one, two, three years. They're some are signed at the middle of the year, some are signed at the end of the year. [inaudible] we're, we're, we're, we're, we're,
So, it'll probably be, you know, from Yoll's perspective. [inaudible]
Aaron Haughie: It's kind of a deal by, it's not kind, it's specifically a deal by deal thing, sometimes even at the regional level.
Aaron Haughie: I don't know how helpful that answer was, it kind of all over the board, but that's how it feels to us. As far as setting goals, we do...
We have overall growth goals for that channel.
Aaron Haughie: I'm not going to mention that here. It's got this a little bit higher level detail than we'd like to give but-
Aaron Haughie: But we're leaning into that really, really hard and we find opportunities for growth on a continual basis.
Aaron Haughie: And, you know, as I've mentioned before, we don't win them all . . .
Aaron Haughie: and so, and then I look at that whole opportunity and just say nothing but upside for us so it's really encouraging to see the success there and to know that there's a long runway for us to continue to be successful there.
Speaker Change: kind of a 2020 investor-day presentation. You talked about kind of low teen share in that new single family channel. My guess is, you know, that's worked its way higher over the last couple years.
Speaker Change: I guess if we were to specifically look at that top heavy chunk of the market, is there a good way or maybe rule of thumb that you would have us think about your market share with those large production builders at this stage?
Speaker Change: Outsider, Lenore, there's a lot of upsides. Fair enough. Thank you.
Thank you so much.
Speaker Change: I'm showing no further questions at this time. I would now like to turn it back to Aaron Howell for closing remarks.