Q1 2026 Louisiana-Pacific Corp Earnings Call

May 6, 2026

Operator: Good day. Thank you for standing by. Welcome to the Q1 2026 Louisiana-Pacific Corporation's earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a short question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aaron Howald. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a short question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your first speaker today, Aaron Howald. Please go ahead.

Speaker #2: Thank you, Operator, and good morning, everyone. Thank you for joining LP Building Solutions to discuss our financial results for the first quarter of 2026 and our updated guidance for the second quarter and the remainder of the year.

Aaron Howald: Thank you, operator. Good morning, everyone. Thank you for joining LP Building Solutions to discuss our financial results for Q1 2026 and our updated guidance for Q2 and the remainder of the year. Hosting the call with me this morning are Jason Ringblom and Alan Haughie, who are LP's Chief Executive Officer and Chief Financial Officer, respectively. After prepared remarks, we will take a round of questions. During today's call, we will be referencing a presentation that has been posted to LP's IR website, which is investor.lpcorp.com. Our 8-K filing, earnings press release, and other materials are also available there. Finally, today's discussion contains forward-looking statements and non-GAAP financial metrics, as described on slides 2 and 3 of the earnings presentation. The appendix of the presentation also contains reconciliations that are further supplemented by this morning's 8-K filing.

Aaron Howald: Thank you, operator. Good morning, everyone. Thank you for joining LP Building Solutions to discuss our financial results for Q1 2026 and our updated guidance for Q2 and the remainder of the year. Hosting the call with me this morning are Jason Ringblom and Alan Haughie, who are LP's Chief Executive Officer and Chief Financial Officer, respectively. After prepared remarks, we will take a round of questions. During today's call, we will be referencing a presentation that has been posted to LP's IR website, which is investor.lpcorp.com. Our 8-K filing, earnings press release, and other materials are also available there. Finally, 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 reconciliations that are further supplemented by this morning's 8-K filing.

Speaker #2: Hosting the call with me this morning are Jason Ringblum and Alan Haughie, who are LP's Chief Executive Officer and Chief Financial Officer, respectively. After prepared remarks, we will take a round of questions.

Speaker #2: During today's call, we will be referencing a presentation that has been posted to LP's IR website, which is investor.lpcorp.com. Our 8K filing earnings press release and other materials are also available there.

Speaker #2: Finally, today's discussion contains forward-looking statements and non-GAAP financial metrics, as described on slides 2 and 3 of the earnings presentation. The appendix of the presentation also contains reconciliations that are further supplemented by this morning's 8-K filing.

Speaker #2: Rather than reading those materials, I will incorporate them by reference. And with that, I'll turn the call over to Jason.

Aaron Howald: Rather than reading those materials, I will incorporate them by reference. With that, I'll turn the call over to Jason.

Speaker #3: Thanks, Aaron. Good morning, everyone, and welcome to LP's earnings call for the first quarter of 2026. We appreciate you joining us. I'm proud to say that in the first quarter, LP navigated the challenges of a complex market exceptionally well.

Jason Ringblom: Thanks, Darren. Good morning, everyone, welcome to LP's earnings call for Q1 2026. We appreciate you joining us. I'm proud to say that in Q1, LP navigated the challenges of a complex market exceptionally well. Against an increasingly volatile macro backdrop, despite significant impact from winter storms and the conflict in Iran, we delivered on our guidance. Price realization, both in siding and OSB, exceeded our expectations, partially offsetting lower volumes and contributing to EBITDA performance above the high end of our guided range. I'll discuss our results for the quarter at a high level before describing what we are seeing in the various markets that we serve. One highlight that we are incredibly proud of is our safety performance in the quarter.

Speaker #3: Against an increasingly volatile macro backdrop, and despite significant impact from winter storms and the conflict in Iran, we delivered on our guidance. Price realization, both in Siding and OSB, exceeded our expectations, partially offsetting lower volumes and contributing to EBITDA performance above the high end of our guided range.

Speaker #3: I'll discuss our results for the quarter at a high level before describing what we are seeing in the various markets that we serve. One highlight that we are incredibly proud of is our safety performance in the quarter.

Speaker #3: LP team members in North America worked over a million and a half hours, with a world-class total incident rate of only 0.26. I also want to recognize our newest siding mill in Sagola, Michigan, for achieving two years without a recordable injury.

Jason Ringblom: LP team members in North America worked over 1.5 million hours with a world-class total incident rate of only 0.26. I also wanna recognize our newest siding mill in Sagola, Michigan, for achieving 2 years without a recordable injury. Our goal will always be zero injuries, but I wanna personally thank every LP team member who contributes to our award-winning safety culture. From a macroeconomic perspective, given the trajectory with which the housing market weakened over the course of 2025, we expected the Q1 would be a challenging comparable. Accordingly, as you can see on page 5 of the presentation, our net sales were down compared to the prior year quarter, driven largely by softer OSB demand and lower commodity prices, which fell below EBITDA break even for Q4 of last year and Q1 of this year.

Jason Ringblom: LP team members in North America worked over 1.5 million hours with a world-class total incident rate of only 0.26. I also wanna recognize our newest siding mill in Sagola, Michigan, for achieving two years without a recordable injury. Our goal will always be zero injuries, but I wanna personally thank every LP team member who contributes to our award-winning safety culture. From a macroeconomic perspective, given the trajectory with which the housing market weakened over the course of 2025, we expected the Q1 would be a challenging comparable. Accordingly, as you can see on page five of the presentation, our net sales were down compared to the prior year quarter, driven largely by softer OSB demand and lower commodity prices, which fell below EBITDA break even for Q4 of last year and Q1 of this year.

Jason Ringblom: OSB price softness accounted for a $66 million reduction in net sales and EBITDA. By contrast, the pricing power of SmartSide helped offset lower sales volume, moderating revenue declines. LP delivered EBITDA in the quarter of $82 million, representing an $80 million decline year-over-year, primarily from $66 million in lower OSB prices, which I mentioned earlier. Siding EBITDA was only $5 million lower, despite 10% lower net sales, with the remaining roughly $9 million attributable to other factors, including South America and higher corporate unallocated expenses. For the quarter, LP delivered $0.38 in adjusted earnings per share and returned $21 million to shareholders via dividends. I'm pleased to share that we saw minimal impact from crude oil price volatility in Q1.

Jason Ringblom: This reflects both near-term agility of our supply chain and operations teams, as well as the longer-term algorithmic structure of many of our strategic supply contracts. We did see modest increases in freight rates, which was not surprising given how quickly diesel prices respond to crude oil supply disruptions. Overall, however, other inflationary impacts were minimal in the quarter. Alan will share some sensitivity analyses later to help model the direct and indirect impacts of crude oil price volatility on our raw material costs in Q2 and beyond. Next, I will go a layer deeper and spend a few minutes describing how the quarter unfolded across the three market segments that the siding business serves, each representing roughly one-third of siding volume. I will start with off-site construction, which includes both sheds and manufactured housing.

Jason Ringblom: While currently largely consisting of shed volume, opportunities are plentiful to grow market share in manufactured housing as well. As discussed in our prior call, pre-buys in advance of our annual price increase resulted in elevated channel inventories. This was not exclusively a shed phenomenon, but the impact was disproportionately felt in this segment. In February, we anticipated that this would be a drag on Q1 volumes while expecting channel inventory to normalize in Q2. I'm pleased to say that this has played out more or less as we expected. While shed volumes were off significantly in Q1, sell-through rates held up quite well, and channel inventory is now back within seasonally normal ranges. Another third of LP's siding volume goes into the repair and remodeling market, with pre-finished ExpertFinish being our fastest-growing product line within this segment.

Jason Ringblom: In Q1, ExpertFinish accounted for 12% of our siding volume and 18% of siding revenue. We believe that ExpertFinish has a long runway for growth and continued share gains, and we are investing accordingly to support that demand. Our newest ExpertFinish line in Green Bay, Wisconsin, which adds approximately 50 million square feet or 25% to annual capacity, is now ramping up and making excellent progress. We also plan to add a further 20 million square feet of capacity at our Bath, New York facility later this year. Finally, in late April, we acquired a piece of land in North Branch, Minnesota, where we intend to build additional ExpertFinish capacity to support growing demand over time. The final third of LP siding is used in new residential construction.

Jason Ringblom: One of our most significant growth opportunities is with the national home builders, where we remain relatively under-penetrated. We believe we are uniquely well-positioned to build mutually beneficial partnerships with these home builders by leveraging SmartSide's labor-saving value proposition together with our integrated portfolio of OSB and Siding. So far in 2026, we have secured 2 new builder partnerships, and we continue to actively pursue additional opportunities. To give you a sense of scale for the business we recently secured with the nation's largest home builders, as well as the magnitude of the opportunity ahead, I'll share some specifics. We currently expect to supply about 100 million sq ft of SmartSide in total to 15 of the top 25 US home builders.

Jason Ringblom: One of our most significant growth opportunities is with the national home builders, where we remain relatively under-penetrated. We believe we are uniquely well-positioned to build mutually beneficial partnerships with these home builders by leveraging SmartSide's labor-saving value proposition together with our integrated portfolio of OSB and Siding. So far in 2026, we have secured two new builder partnerships, and we continue to actively pursue additional opportunities. To give you a sense of scale for the business we recently secured with the nation's largest home builders, as well as the magnitude of the opportunity ahead, I'll share some specifics. We currently expect to supply about 100 million sq ft of SmartSide in total to 15 of the top 25 US home builders.

Jason Ringblom: We estimate that this represents a high single-digit share of the total exteriors market for these builders and a similar high single-digit percentage of our overall SmartSide volume. Again, we believe that the unique value proposition we can offer these home builders gives us significant opportunities for additional growth in the years to come. Finally, before I turn the call over to Alan Haughie, I wanna recognize Dustan McCoy and Ozey K. Horton Jr., both of whom retired last week from LP's board of directors. Personally, and on behalf of the entire LP team, I wanna thank Dusty and Ozzie for their insights, their thoughtful counsel, and their contributions to LP's culture and strategic transformation. With that, let me turn the call over to Alan Haughie for a more thorough review of LP's financial results and our updated guidance.

Alan Haughie: Thank you, Jason. I'd also like to add my thanks and congratulations to the whole LP team for a very strong quarter for safety, and to Dusty and Ozzie for their service on LP's board of directors. I know I have certainly benefited from their wisdom and guidance over the last 7 years. The Q1 performance for Siding is shown on page 8 of the presentation. In line with expectations, unit volumes were down by 18% year-over-year. As discussed on the last earnings call, in addition to a slowing market, we exited the Q4 with increased channel inventory following the announcement of our January price increases. A disproportionate amount of that inventory was held by distributors serving our shared customers, where elevated inventory led to volume declines both sequentially and year-over-year.

Alan Haughie: Thank you, Jason. I'd also like to add my thanks and congratulations to the whole LP team for a very strong quarter for safety, and to Dusty and Ozzie for their service on LP's board of directors. I know I have certainly benefited from their wisdom and guidance over the last seven years. The Q1 performance for Siding is shown on page eight of the presentation. In line with expectations, unit volumes were down by 18% year-over-year. As discussed on the last earnings call, in addition to a slowing market, we exited the Q4 with increased channel inventory following the announcement of our January price increases. A disproportionate amount of that inventory was held by distributors serving our shared customers, where elevated inventory led to volume declines both sequentially and year-over-year.

Alan Haughie: ExpertFinish, on the other hand, continues to be the best-performing product category within siding, which in this market means volumes were flat. The 9% increase in selling prices partly mitigated the decline in volume, with primed prices increasing by 8% and ExpertFinish prices increasing by 10%. Now, there are a few moving parts within all of this, so let me briefly unpack it. The largest single contributor to the reported 9% price increase is naturally our 1 January list price increase, which averaged four to five points. The remainder, let's call it four and a half points, is roughly two and a half points from favorable mix and around two points from rebate refinements.

Alan Haughie: The mix dynamics are the result of lower volume of shared products within the primed product category and relatively strong volumes for ExpertFinish, including the two-toned Naturals Collection, which we launched in Q2 2025. What I referred to as rebate refinements include the final recognition of lower than expected rebate payments relating to Q4 of last year, as well as modestly lower rebate accrual rates in 2026. Both factors are, of course, volume related. As we look toward Q2, we expect list price realization to remain steady, of course, while mix and rebate impacts will probably normalize somewhat. Price and volume combined for a revenue reduction of $42 million, but an EBITDA hit of only $8 million.

Alan Haughie: The $2 million reduction in selling and marketing costs is merely timing. While inflationary costs have been mild so far, I'll discuss this subject further in a moment. The other bar includes the non-recurrence of the EBITDA benefit of last year's OSB production at siding mills, more than offset by some inventory build in anticipation of maintenance outages later in the year. The resulting EBITDA margin of 28% for Siding was, of course, helped by the rebate and inventory dynamics I mentioned earlier, and would be closer to last year's 26% without these factors. In the long run, the roughly 50% incremental EBITDA on volume, albeit on a decline this quarter, shows the significant leverage that this business will deliver as and when growth resumes. For OSB on page 9, price is once again the dominant element.

Alan Haughie: In 2025, OSB prices were at their highest in Q1, fell significantly in Q2, and have been mired near EBITDA breakeven for the past several months. As a result, prices are 28% lower than Q1 of last year, resulting in $66 million less revenue and EBITDA. Lower OSB volumes for both commodity and Structural Solutions reduced sales and EBITDA by a further $30 million and $10 million, respectively. Now, the operations team did an outstanding job of controlling what they can, operating efficiently, minimizing costs, and prioritizing safety.

as a result prices are 28% lower than the first quarter of last year, resulting in 66 million, less revenue, and even de

Lower, OSB volumes for both commodity and structural Solutions reduced sales and IBA by a further 300% 10 million respectively.

Alan Haughie: As a result, mill overhead and SG&A contributed $5 million in year-over-year savings, and the -$3 million shown in the siding waterfall from lower OSB transfers is offset here with income. All of this results in a $12 million EBITDA loss, better than our guidance amidst a very challenging demand and price environment. Cash flow on page 10 shows net operating cash outflow of $38 million compared to an inflow of $64 million last year, reflecting the $80 million reduction in total EBITDA and the somewhat larger than usual buildup of log inventory. Cash ended the quarter at $164 million, and we have $900 million in liquidity, including our undrawn revolver.

Now, the operations team did an outstanding job of controlling, what they can operating efficiently, minimizing costs and prioritizing safety as a result mil overhead and sgna contributed $5 million in year of year savings and the $3 million negative shown in the siding water ball from lower OSB transfers is offset here with income.

All of this results in a 12 million dollar Uber Dal loss. Better than our guidance amidst, a very challenging demand and price environment.

On page 10 shows net operating cash outflow of 38 million compared to an inflow of 64 Million last year, reflecting the 80 million reduction in total i-bidder, and the somewhat larger than usual. Build up of login in 3.

Alan Haughie: Now before I conclude with our updated guidance, let me address the impact of crude oil prices on LP's raw material and freight costs as shown on page 11. Starting with freight. Roughly speaking, we estimate that each $10 per barrel increase in crude oil corresponds to a $0.03 per mile increase in LP's variable freight costs on a blended basis, assuming current rail trip mix and refinery margins. LP experienced total freight usage of the order of 30 million miles in 2025. The full-year freight cost impact of each $10 per barrel increase in crude oil prices, all else equal, would be an annual impact of about $1 million. In OSB, freight is generally passed through, while siding is priced on a delivered basis, so that the EBITDA impact to LP would be mitigated by that dynamic.

Cash ended the quarter at 164 million and we have 900 million in liquidity, including our undrawn revolver.

Now before I conclude with our updated guidance, let me address the impact of crude oil prices on elps, raw material and freight costs as shown on page 11.

Starting with Freight.

Roughly speaking, we estimate that each ten dollars per barrel increase in crude oil, corresponds to a 3 cents per mile, increase in elps available freight costs on a blended basis assuming current rail trip, mix and Refinery margins.

LP experience total Freight usage of the order of 30 million miles in 2025. So the 4 year freight cost impact of each $10 per barrel increase in crude oil prices. All our SQL would be an annual impact of about a million dollars.

Alan Haughie: I should also add that LP siding is lighter and more durable than some competing alternatives, which allows us to ship by rail and transport much more volume on a truck than these competitors can. For raw materials excluding logs, many of our inputs have crude oil as feedstock, including resins, primer, and paint. Of course, the delivered cost of these materials includes some freight. For raw materials across LP's North American business, we estimate that the total annual cost impact of each $10 per barrel increase in crude oil is of the order of one and a half to two million dollars per quarter or $6 to 8 million per year, all else equal. This would be split roughly 75, 25 between siding and OSB, given siding's more raw material-intensive recipe.

Respond, much more volume on a truck than these competitors can.

From raw materials, excluding logs. Many of our inputs have crude oil as feed stock, including resins primer and paint and of course, the delivered cost of these materials include some Freight.

For raw materials across elps North American Business, we estimate that the total annual cost impact of each 10 dollars per barrel increase. In crude oil, is of the order of 1 and a half to 2 million per quarter or 6 to 8 million per year, all of our SQL.

Alan Haughie: LP can experience a slight cost impact for logs when higher diesel prices impact harvesting and delivery costs, but compared to the freight and raw material costs, the log cost impact is small enough to be immaterial for modeling purposes. Bear in mind that these are estimates of annual impacts. Many of our raw material supply contracts have trailing algorithmically adjusted prices with varying update cycles. The specific timing of these various impacts is more variable. We saw minimal impacts in Q1, but if prices stay elevated, we will trend towards these annual run rates over the next 2 quarters or so. Our raw material cost estimates are incorporated in our updated guidance, as shown on slide 12. Like our approach to OSB guidance, we will explicitly avoid any attempt to predict future crude oil prices.

And this would be split roughly 75.25 between siding and OSB given sidings more raw material intensive recipe.

LP can experience a slight cost impact, for logs, when higher diesel prices impact, harvesting, and delivery costs. But compared to the freight and raw material costs. The log cost impact is small enough to be immaterial for modeling purposes.

now, bear in mind that these are estimates of annual impacts,

Many of our raw material supply contracts, have trailing algorithmically adjusted prices with varying updates Cycles. So the specific timing of these various impacts is more variable. Um we saw minimal impacts in the first quarter.

But if prices stay elevated, we will Trend towards these annual run rates over the next 2 quarters or so.

Alan Haughie: Frankly, we're less concerned about the cost impact of higher crude oil prices than we are about the broader macroeconomic and demand impacts and the general volatility driving them. You will recall that our full year guidance was predicated on housing starts being flat year over year. Mathematically, flat starts would require a rebound in H2. We made no attempt to predict the timing or trajectory of that rebound, but expected that improving consumer confidence, moderating interest rates, and seasonal increases in OSB price and demand would be the bellwethers that would signal its approach. As you are all aware, especially following the conflict in Iran, not only are those market indicators not improving, but they continue to erode.

Our rheumatoid cost, estimates are Incorporated and I updated guidance as shown on slide 12 and like our approach to OSB guidance. We will explicitly avoid any any attempts to predict future crude oil prices?

Have frankly, well less concerned about the cost impact of higher crude oil prices than we are about the broader macroeconomic and demand impacts and the general volatility driving them.

You will recall that our full year guidance was predicated on how housing starts being flat you over a year mathematically. Flat starts would require a rebound in the second half.

Now, we made no attempt to predict the timing of trajectory of that rebound, but expected that improving consumer confidence. Moderating interest rates and seasonal increases in OSB price and demand would be the Bell weathers that would signal its approach. And as you are all aware, especially following the conflict in Iran, not only in those market indicators, not improving.

Alan Haughie: Now, while our order files and siding give us a good bit of visibility into Q2, high input costs, falling consumer confidence, and increasing interest rates are magnifying uncertainty about demand in H2. As a result, we feel it's prudent to temper our expectations for H2. Current lower levels of market activity, we anticipate siding volume declines year over year in Q2 of about 10%, with sequential improvements through year-end. Within this, ExpertFinish is expected to continue to outperform primed products as we gain share relative to competing pre-finished alternatives. We therefore expect full-year ExpertFinish volume growth in the mid-single digits range.

But they continue to erode.

Now while our order files inside and give us a good bit of visibility into the second quarter. High input costs fall in consumer confidence and increasing interest rates are magnifying uncertainty about demand in the back, half of the year.

As a result, we feel it's prudent to temper our expectations for the second half.

Current lower levels of Market activity. We anticipate siding volume, declines, eova, and the second quarter of about 10% with sequential improvements through year end.

Alan Haughie: List prices should remain very steady, of course, but the very strong price mix effect of Q1 is expected to moderate as shed mix increases now that the channel inventory of shed products has normalized. As a result of these volume and price dynamics, we currently expect siding revenue in Q2 between $435 and $445 million and EBITDA between $115 and $120 million. For the full year, siding revenue and EBITDA are now expected to be between $1.64 and $1.66 billion, with EBITDA between $410 and $425 million. For OSB, we're applying our normal methodology, assuming prices remain flat from last Friday's printed level.

Within this expert, finish is expected to continue to outperform Prime products. As we gain share, relative to competing prefinished Alternatives. We therefore expect 4 year, expert finish volume growth in the mid single digits range.

list prices should remain very steady, of course, but the very strong price mix effect of the first quarter is expected to moderate as shed mix increases now that the channel inventory of shed products as normalized

As a result of these volume and price Dynamics, we currently expect siding Revenue in the second quarter between 435 and 4445, million, and ebitda between 115 and 120 million for the 4 year. Siding Revenue in ibadan are now expected to be between 1.64 and 1.66 billion with ibida between 410 and 425 million.

Alan Haughie: Unfortunately, Friday's print included a significant drop in the Southeast and Southwest regions, bringing OSB prices back under EBITDA breakeven levels. As a result, we now expect OSB EBITDA in Q2 to be a loss of about $10 million. Now, we don't plan to merely plod doggedly ahead should these prices persist in an oversupplied market. Again, for modeling purposes, extrapolating current prices forward, Q3 and Q4 would deliver similar results as reflected in the revised full year guidance. Finally, while our modeling approach has generally been to assume that LP South America and unallocated corporate expenses net to zero, the economic situation in Chile is similarly depressed and uncertain at the moment, and the softer results in South America are reflected in the total adjusted EBITDA guidance.

For OSB. We're applying our normal methodology assuming prices remain flat from last Friday's printed level.

Unfortunately, Friday's print included a significant drop in the Southeast and Southwest regions, bringing OSB prices back under IBA, Derek—even levels. As a result, we now expect RSB to be down in the second quarter, to be a loss of about $10 million. Now, we don't plan to merely plod doggedly ahead should these prices persist in an oversupplied market. But again, for modeling purposes, extrapolating current prices forward, the third and fourth quarters will deliver similar results, as reflected in the revised four-year guidance.

Alan Haughie: In conclusion, the housing market and general consumer sentiment aren't showing the hopeful signs of recovery yet, and this is most acutely felt in OSB demand and prices.

And finally, while our modeling approach is generally been to assume that LP, South America, and unallocated corporate expenses net to zero. The economic situation in Chile, is similarly depressed and uncertain at the moment and the software results in South America are reflected in the total adjusted. EBA guidance.

Jason Ringblom: We remain confident in the SmartSide value proposition and in the long-run ability of our siding business to gain share in all the segments we serve. With that, we'll be happy to take a round of questions.

So in conclusion, the housing market and general consumer sentiment aren't showing much hope for signs of recovery yet. And this is most acutely felt in OSB demand and prices.

But we remain confident in the smart side value proposition and in the long, run ability of our siding business to gain share in all the segments, we serve.

And with that, we'll be happy to take a round of questions.

Operator: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In order to accommodate as many individuals as possible for questions, we will allow one question and one follow-up question to be permitted per caller. Please stand by while we prepare the Q&A roster. Our first question comes from the line of George Staphos with Bank of America Securities. Your line is live.

Thank you. At this time. We will conduct the question and answer session as a reminder, to ask a question. You'll need to press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please press star 1 1 again in order to accommodate as many individuals as possible for questions. We will allow 1 question and 1. Follow-up question to be permitted per caller please stand by while we prepare the Q&A roster.

George Staphos: Thanks, operator. Hi, everyone. Good morning. Thanks for the details. I wanted to ask a point of clarification if, you know, maybe as a two-parter for my first question. Alan, I just want to make sure, your guidance does not include any assumption on oil pricing per se, correct? If so, can you tell us what the change in oil was relative to your Q4 so that we could somewhat calibrate to your adjustment and guidance relative to the cost? The second part of that question is there a way to give us pro rata, you know, a change in oil, how much hits percentage-wise on cost of manufacturing and siding, and how much hits on the freight side?

Our first question comes from the line of George safos with Bank of America Securities. Your line is live.

Thanks operator. Hi everyone, good morning, thanks for the details. Um I I wanted to ask a point of clarification, if you know maybe as a 2-part for my first question, Aaron. I just want to make sure your guidance does not include any assumption on oil pricing per se. Correct. So if so, can you tell us what the change in oil was relative to your fourth quarter?

Mike Roxland: Well, Alan's done most of the heavy lifting on this. I'm gonna let Alan attempt to answer that question with a, with a level of detail that we're willing to share.

Jason Ringblom: Well, Alan's done most of the heavy lifting on this. I'm gonna let Alan attempt to answer that question with a, with a level of detail that we're willing to share.

So that we could somewhat calibrate uh to your your adjustment and guidance relative to the costs. And the second part of that question is, is there a way to give us porrata, you know, a change in oil, how much hits percentage was on cost of manufacturing and siding and how much hits on on the freight side?

George Staphos: Of course.

Aaron Howald: Thanks for the question, George.

Jason Ringblom: Thanks for the question, George.

George Staphos: As always.

Aaron Howald: In reverse order, the cost of manufacturing through the raw materials is a much larger impact than freight. You know, the full annualized impact of freight is relatively small, again, as Alan detailed.

Jason Ringblom: In reverse order, the cost of manufacturing through the raw materials is a much larger impact than freight. You know, the full annualized impact of freight is relatively small, again, as Alan detailed.

George Staphos: Okay. Okay.

Aaron Howald: you know, we have more miles of transport for OSB just given the volume. You can basically anticipate most of the cost hitting on the raw material side and in the manufacturing side. Within that, about 75% of the impact to cost of manufacturing will land in siding just because of the more raw material intensive recipes of siding relative to OSB. The last thing I'll say is our guidance makes our best attempt to reflect our current understanding of what the actual annualized impact will be, meaning that we have baked in what we have seen near term in terms of those raw material inputs and also our understanding of the various dynamics of the contracts themselves, the supply contracts that is, with regard to their pricing algorithms and methodologies.

Alan Haughie: you know, we have more miles of transport for OSB just given the volume. You can basically anticipate most of the cost hitting on the raw material side and in the manufacturing side. Within that, about 75% of the impact to cost of manufacturing will land in siding just because of the more raw material intensive recipes of siding relative to OSB. The last thing I'll say is our guidance makes our best attempt to reflect our current understanding of what the actual annualized impact will be, meaning that we have baked in what we have seen near term in terms of those raw material inputs and also our understanding of the various dynamics of the contracts themselves, the supply contracts that is, with regard to their pricing algorithms and methodologies.

Well, Allen's in most of the heavy lifting on this. So I'm going to let Aaron uh attempt to answer that question with a with a level of detail that we're willing to uh, share. Well of course, thanks for the question as always. Uh, so in reverse order, um, the, the cost of manufacturing through the raw materials is a much larger impact than Freight. Um, the, uh, you know, the full annualized impact of freight is is relatively smaller than as Alan detailed and and, uh, you know, we we have more miles of Transport for OSB. Just giving the volume. Um, so so you can, you can basically anticipate most of the cost hitting on the raw material side and in the manufacturing side within that about 75% of the impact to cost of manufacturing, will land in sighting. Just because of the more uh raw material intensive um uh recipes of sighting relative to OSB.

Aaron Howald: That's about as specific as we're gonna get on that.

Alan Haughie: That's about as specific as we're gonna get on that.

George Staphos: Yeah

Aaron Howald: rather than diving too deep into the nuts and bolts of those individual contracts. Short answer, yes, the guidance for margins does reflect our best outlook of what we're seeing in the market and what we anticipate seeing in the back half of the year. If prices go significantly higher or lower, you've got the sensitivities to give it some Kentucky windage.

Alan Haughie: rather than diving too deep into the nuts and bolts of those individual contracts. Short answer, yes, the guidance for margins does reflect our best outlook of what we're seeing in the market and what we anticipate seeing in the back half of the year. If prices go significantly higher or lower, you've got the sensitivities to give it some Kentucky windage.

Uh, and the last thing I'll say is our guidance, uh, makes our best attempt to reflect our current understanding of what the actual annualized impact will be, uh, meaning that we have baked in what we have seen near-term in terms of those, uh, raw material inputs. And also, uh, our understanding of the various dynamics of the contracts themselves, the supply contracts that is, uh, with regard to their pricing algorithms and methodologies. Uh and uh that's about a specific as we're going to get on that rather than diving too deep into the into the nuts and bolts of those individual contracts. So short answer, yes. Uh the guidance for margins does reflect our Outlook

George Staphos: Okay. The second question is on the 100 million square feet of siding across the 15 of the top 25 builders, is that the 2026 actual volume that you expect, or is that a run rate? What was the base in 2025, if you could share that? Thank you very much.

Of of what, what we're seeing in the market and what we anticipate seeing in the back half of the year. And if prices go significantly higher or lower, you've got the sensitivities to to give it some Kentucky windage

Okay. Um,

The second question is on the 100 million square feet of siding across the, the 15 of the top 25 Builders uh, is that the 26, actual volume that you expect, or is that a run rate and what was the base in 25? If you could share that, thank you very much.

Jason Ringblom: Yeah. I'll touch on that, George. The 100 million feet that we specified is in fact, you know, where we think we'll land in 2026. Obviously, with the winds that we've communicated in recent calls, you know, the prior year volumes were lower. What I would say about the programs, we're not gonna give specific names, but, you know, each one of these meets a material threshold for us and adds several thousand homes to our portfolio. You know, in both cases, these programs that we talked about really provide us access to new markets where we're under-penetrated, specifically in the Southeast and Southwest markets.

Jason Ringblom: Because of that, it's allowing builders and contractors, to really experience the benefits of using LP SmartSide and in many cases, for the first time with respect to installers.

Yeah, I'll touch on that. George the, the 100 million feet that we specified is, in fact, uh, you know, where we, where we think we'll land in 26. Um, you know, obviously, uh, with the, the winds that we've communicated, uh, and recent calls, you know, the prior year volumes were were lower. Um, what I would say about the the programs we're not going to give specific names. But, you know, each 1 of these meets a a material threshold for us and add several thousand homes to our Port portfolio. And, you know, in both cases, um, these programs that we we talked about really provide us access to New Markets, where we're we're under penetrated specifically in the Southeast and Southwest markets. Uh, and, and because of that, it's allowing builders and contractors, uh, to really experience the benefits of using smart side. And and in many cases,

George Staphos: Jason, I get that. Is there any way to size, is that a third increase, a 25% increase, a 2% increase? Any granularity would be helpful. Thanks and good luck in the quarter.

cases, uh, for the first time with respect to installers,

Jason, I get that is there any way to size? Is that a third increase of 25%, increase of 2%, increase any, any granular would be helpful and thanks and good luck in the quarter.

Jason Ringblom: Yeah. I would say it's, you know, above 10%.

George Staphos: Okay. Thanks so much.

yeah, I would, I would say it's, you know, above 10%

Okay.

Aaron Howald: Thank you.

Alan Haughie: Thank you.

Jason Ringblom: You bet. Thank you.

Thanks so much.

Thank you. You bet. Thank you.

Operator: Thank you. Our next question comes from the mic of Mike Roxland of Truist Securities. Your line is live.

Mike Roxland: Thank you, James, Alan, and Aaron for taking my questions. One quick one just on, I believe the gap between vinyl and engineered wood siding has narrowed. Vinyl, you know, seeing increases due to oil, I think there's been a price increase announced for May, 3% to 8% on most products. Where does the price spread currently stand between vinyl and engineered wood, and how does that compare to, let's say, 3 or 6 months ago? Have you seen any switching to engineered wood or, let's say even if not switching itself, were indications of interest to switch to engineered wood as a result of this narrowing spread?

Of Mike roxland of truist Securities. Your line is live.

Uh, thank you, James melon, and Aaron for taking my questions. Um, 1 quick 1 just I believe the gap between vinyl and engineered was signing his narrowed uh vinyl. You know, seeing increases due to oil. I think there's been a price increase announced for May 3 to 8%, the most products. So where's the price spread? Currently stand between vinyl and engineered wood and how does that compare to let's say 3 or 6 months ago and you have you seen any switching tedria wood? Or let's say even not switching itself or indications of interest to switch to engineered wood as a result of this narrowing spread?

Jason Ringblom: Mike, I'll touch on that. I mean, as you noted, you know, we're hearing from our customers that there are some manufacturers going up on the vinyl side. That just makes SmartSide, you know, more attractive with regard to that specific comparison. That's something we're keeping a close eye on. I do think most of that has taken place over the course of, you know, the last 30 days essentially. We haven't felt anything material in our order file as it relates to some of the changes in pricing dynamics in the market.

Mike Roxland: Gotcha. But any in terms of your customers themselves, nothing in the order file just yet, but indications that there could be some increasing orders or better demand should this spread continue to narrow?

Mike I'll touch on that. I mean, as you noted, you know, we're hearing from our customers that there are some manufacturers going up on the vinyl side that that just makes Smart side, you know, more attractive uh with regard to that specific comparison. So uh, that's something we're keeping a close eye on but I I I do think, uh, most of that has has taken place over the course of, you know, the last 30 days essentially. So we haven't, uh, felt anything material in our order file, as it relates to some of the changes in, uh, pricing Dynamics in the market.

Jason Ringblom: Yeah. I think, you know, anytime that spread narrows, it presents an opportunity and, you know, we're positioned well to capitalize on that. We like the narrowing of that spread and, you know, we'll take advantage of it where we can.

Gotcha. But any uh in terms of your customers themselves, nothing in the order file just yet but indications that there could be some increasing order uh increasing orders or better demand. Should this spread continue to narrow?

Mike Roxland: Just one quick follow-up, Jason. Where does that spread currently stand relative to three months ago, six months ago?

Yeah. I think you know, anytime that spread Narrows um it it presents an opportunity and you know, we're positioned well to capitalize on that. So we we like the uh the narrowing of that spread. And you know, we'll we'll take advantage of it where we can.

I just want quick followup, you where is that spray currently stand relative to 3 months ago 6 months ago.

Jason Ringblom: I mean, it's tough to really put your finger on that. I mean, what we're hearing is price increases in the neighborhood of, you know, 6% to 12% depending on, you know, who it is. I mean, the spread has narrowed by that much.

I mean, uh, it—it's tough to really put your finger on that. I mean, what we're hearing is price increases in the neighborhood of, you know, 6 to 12%, depending on, you know,

Mike Roxland: Gotcha. One last one, I'll turn it over. Just any update just on the potential conversion at Manitowoc?

Who it is. So, I mean, the, the the spread has narrowed, uh, by by that much.

Gotcha 1, last 1, I'll turn it over. Just any any update just on the uh potential conversion that mawaki?

Jason Ringblom: Yeah, I can touch on that, Mike. You know, as of today, we have roughly speaking, you know, about 400 to 500 million feet of capacity to support our growth on the primed side. You know, we've explained our options for expansion on prior calls, so I won't get into that. What I will say is that the engineering work continues on a couple of different paths, including Manitowoc. Nothing new there to share. I would expect we'll be in a position to share some more information in the coming quarters.

Yeah, I can touch on that. Uh, Mike, um, you know, as of today, uh, we have, roughly speaking, you know, about 400 to 500 million feet of capacity to support our growth, uh, on the Prime side. Um, you know, we've explained our options for expansion on prior calls, so I won't get into that. But what I will say is that the engineering work continues on a couple of different paths, including Maniwaki. So

Mike Roxland: Thank you.

Nothing new there to share. Uh but I I would expect uh we'll be in a position to share some more information in the coming quarters.

Thank you.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Anika Dholakia. Your line is live.

1 moment for our next question.

Thank you.

Anika Dholakia: Good morning. You have Anika Dholakia on for Matt today. Thank you for taking my questions. First off, I guess just staying on capacity. I guess even as volumes come in softer than expected, our understanding is that the Green Bay line would still support margin expansion given its higher efficiency. Do you guys have a sense of the magnitude of the potential margin benefit if this were the case? How is that contemplated in the guidance? Thanks.

our next question comes from the line, your last

Good morning. You have an e-mail to lock you out on for Matt today. Thank you for taking my questions.

Um so first off I guess just um, staying on capacity, so I guess even if volumes come in softer than expected, our understanding is that the Green Bay line would still support margin expansion. Given its higher Efficiency? Do you guys have a sense of the magnitude of the potential margin benefit if this were the case? And then how is that contemplated in the guidance?

Aaron Howald: Yeah. Thanks, Anika. Good question. It is contemplated, but the margin benefit really accrues to us more when the facility is fully ramped up. Early in its ramp up, which is where we are now, that effect is less pronounced both by virtue of lower efficiency in the early days of operations and smaller amount of volume as it goes through. I think very roughly speaking, if you think about the margin improvement for ExpertFinish being on a similar trajectory that it was last year, I think that puts you in the right ballpark. Then as we get more volume through that facility, we'll really be able to, you know, to see the effect of that efficiency and get more specific about its actual effect in subsequent quarters.

Alan Haughie: Yeah. Thanks, Anika. Good question. It is contemplated, but the margin benefit really accrues to us more when the facility is fully ramped up. Early in its ramp up, which is where we are now, that effect is less pronounced both by virtue of lower efficiency in the early days of operations and smaller amount of volume as it goes through. I think very roughly speaking, if you think about the margin improvement for ExpertFinish being on a similar trajectory that it was last year, I think that puts you in the right ballpark. Then as we get more volume through that facility, we'll really be able to, you know, to see the effect of that efficiency and get more specific about its actual effect in subsequent quarters.

Yeah, thanks Anita, good question. Um, it is contemplated but the margin benefit really occurs to us more when the facility is fully ramped up. Uh, early in its ramp up, which is where we are now. Uh, that effect is less pronounced both by virtue of lower efficiency in the early days of operations and smaller amount of volume as it goes through. So I think very roughly speaking. If you think about the margin Improvement for expert finishes being on a similar trajectory that it was last year, uh, I think that puts you in the right ballpark. Uh, and then as we get more volume through that facility will really be able to to, you know, to see the effect of that efficiency and get more specific.

Jason Ringblom: We'll certainly bleat about it as and when it happens.

Anika Dholakia: Okay, great. That's really helpful. Then I guess second, back to the new construction opportunity. When we think about the siding volume of the 15 of the top 25 builders, where can this high single-digit number get to as we think of maybe a more normalized starts environment? Then just as you think more broadly longer term, for your new construction strategy, how are you growing in that channel? Is it more thinking about growing wallet share? Is it building up the number of builder partnerships? Thanks.

Specific about its actual effect, in subsequent quarters. We'll certainly bleed about it as and when it happens.

Jason Ringblom: Yeah, appreciate the question. What I would say is, you know, in the new construction segment, specifically with the top 25 builders, you know, we still have a relatively small share position, you know, in the high single digits as we noted earlier. There's a ton of opportunity there. You know, at the end of the day, we're trying to be very, you know, disciplined or strategic in terms of where we leverage these enterprise programs. It's really about getting access to, you know, markets where we're historically under-penetrated, building a stocking dealer base around those programs, and then obviously building our business around some of those wins. It's, you know, something we're excited about and really leveraging as we go forward.

Okay, great, that's really helpful. Um, and then I guess second. So back to the new construction opportunity, um, when we think about the siding volume of the, 15 of the top 25 Builders where can this High single digit number get to, as we think of maybe a more normalized starts environment and then just I think more broadly longer term your for your new construction strategy, how are you growing in that channel? Is it more thinking about growing wallet? Share, is it building up the number of Builder Partnerships? Thanks

Uh what I would say is, you know, in the new construction segment specifically with the the top 25 Builders, you know, we still have a, a relatively small uh, share position, you know, in the high single digits as we noted earlier. Uh so there's a there's a ton of opportunity there. You know, at the end of the day we're trying to be very um

Jason Ringblom: In terms of the growth opportunity, I mean, at high single digits, you know, the opportunity is very significant for us and, you know, that'll be the focus going forward.

Anika Dholakia: Okay, great. Thanks. I'll pass it on.

You know, disciplined, or strategic in, in terms of uh, where we leverage these uh, Enterprise programs. It's it's really about getting access to, you know, markets where we're historically under penetrated, um, building a stocking dealer base, around those programs and then, uh, obviously building our our business around some of those wins. So, uh, it's uh, you know, something, we're excited about and and uh, really leveraging as we go forward in terms of the growth opportunity, I mean at at high single digits, um you know the opportunity is very significant for us and you know, that'll be the focus going forward.

Jason Ringblom: Thank you.

Okay, great, thanks. I'll pass it on.

Operator: One moment for our next question. Our next question comes from the line of Ketan Mamtora of BMO Capital Markets. Your line is now open.

1 moment for our next question.

Our next question comes from the line of Kayton Moura.

Ketan Mamtora: Good morning. Thanks for taking my question. Maybe just coming back to the full year siding guidance. You know, it just backing into the numbers, it feels like, you know, the guide is $32 million below kind of what y'all had talked about as you look at the midpoint of guidance. Q1 was kind of a solid beat, about $18 million higher. It almost feels like a $50 million swing for the remaining three quarters. Can you sort of highlight maybe two or three key points that would help us sort of think about the key pieces here?

Of BMO Capital markets, your line is now open.

Good morning, and thanks for taking my question. Maybe just coming back to the full-year siding guidance.

um, you know, it it

It just backing into the numbers. It feels like you know the guide is 32 million below, kind of what you all had talked about. As we look at the midpoint of Biden's. Um but q1 was kind of a solid beat about 18 million higher so it almost feels like a 50 million swing for the remaining 3 quarters. Can you sort of highlight maybe 2 or 3 key points that would help us sort of think about the key uh pieces here?

Alan Haughie: Yeah, sure, Ketan. The drop in guidance, the line cut out a bit. Were you referring to the EBITDA impacts?

Ketan Mamtora: Sorry.

Alan Haughie: Well.

Yeah, sure. Um Keaton the, the drop in guidance, I'm, I'm, were you referring to ebit the line cut out a bit? We referring to the ebit diet impact.

Ketan Mamtora: Yeah, I was referring to the EBITDA.

Alan Haughie: Yeah. Yeah. You're right. It's about a $50 million drop from the midpoint. High level, you've got to assume that the majority of this reduction is volume related. Let's call it $70 million worth of volume, which comes through at a 50% variable margin, so that accounts for about $35 million. To sort of triangulate into one of the other questions, there's then about $15 million, roughly, or $15 to 20 million, of impacts from oil in the H2 of the year. Concentrated more in the H2 than it is in the Q2. That $15 million is roughly $35 million from volume, $15 million from oil-based costs.

I was sorry. Yeah I was referring to the tax. Yeah, yeah yeah. So yeah you're right it's about a 50 million drop from the midpoint um high level. You've got to assume that that the majority of this reduction is volume related. Let's call it 70 million, um dollars worth of volume, which comes through at a 50% variable margin. So that accounts for about 35 million and to sort of triangulate into 1 of the other questions. There's then about 15 million dollars, roughly of 15 to 20 of um impacts from oil. Um, in the in the back, half of the Year concentrated more in the second half than it is in second in the second quarter. So

Ketan Mamtora: I see. Perfect. No, this is very helpful. Jason, you talked about, you know, expanding the dealer network. There's a recent partnership as well with Sherwood Lumber here out on the East Coast. Can you talk about sort of how you are thinking about your existing distribution partnerships? Obviously, I'm not asking you to name them, but just in terms of how you are thinking about them, of these relationships and where do you think you've got opportunity to sort of penetrate more? Thank you.

That fifty million dollars is roughly 35 million from volume 50 million from, um, oil based costs.

Jason Ringblom: Appreciate the question, Ketan. You know, as I think about our distribution network, I think I've mentioned on prior calls that, you know, we have really good access to market through our traditional two-step distributors. You know, those folks, you know, typically in most markets, we have two distributors. In some there might be some overlap where we have three. Those two-steppers, you know, provide supply to many of the pro dealers and one-steppers.

I see perfect. Now, this is, uh, this is very helpful. Um, and then, um, Jason, you talked about, you know, expanding the, the dealer Network. Um, you know, you there's a recent partnership as well with, with Sherwood Lumber here out on the East Coast. Can you talk about sort of how how you are thinking about your existing, uh, distribution Partnerships. Obviously I'm I'm not asking you to name them, but just in terms of how you are thinking about them uh of these relationships and um and where do you think you've got um opportunity to to sort of penetrate more? Thank you.

Jason Ringblom: That is where our access to market, I would say, could be improved in some regions and really is the focal point of our enterprise program strategy to really build out that pull-through demand in those markets where we're under-penetrated, so we can build our stocking dealer network with those pro dealers, one-steppers, et cetera, to grow our business with contractors and builders beyond those programs.

Appreciate the question Keaton. Um you know, so I think about our distribution Network, I think I've mentioned on prior calls that, you know, we have really good access to Market through our uh, traditional 2-Step Distributors. And, you know, those folks, you know, typically in in most markets, we have have 2 Distributors. Um, and some there might be some overlap where we have 3. Uh so those 2 steppers um you know provide uh Supply to many of the pro dealers and and 1 steppers. Um so that is where uh our access to markets. Uh, I would say could be improved in some regions, and really is uh the the focal point of our Enterprise program.

Strategy to really uh, build out that pull through demand and those markets where we're under penetrated. So, um, we can build our, our stocking dealer network with those Pro dealers, 1 steppers Etc. Uh, to grow our business with uh, contractors and Builders Beyond those programs.

Ketan Mamtora: Understood. Very helpful. I'll turn it over. Good luck.

Jason Ringblom: Thank you.

Ketan Mamtora: Thank you.

Understood very helpful. I love, I'll turn it over. Good luck.

Operator: One moment, next question. Thank you. Question comes from Steven Ramsey from Thompson Research. Your line is open.

Thank you.

Next question.

Tom.

Research.

Steven Ramsey: Hi, good morning. Wanted to think about the cross-selling to builders. Clearly, it seems like success winning share with builders. I'm curious if you could parse out how much of that is success cross-selling OSB and siding, or is this pure siding wins?

Hi. Good morning, wanted to think about uh, the cross-selling to builders. Clearly, it seems like success winning share with Builders. I'm curious if you could parse out how much of that is Success cross-selling OSB and siding or is this pure, siding wins?

Jason Ringblom: Yeah, thanks for the question, Steven. What I would say is, it's both. You know, I think at the end of the day, you know, I do believe that the integration of our two businesses that occurred, you know, roughly a year ago here at LP is allowing us to be, I would say, more creative, more flexible, more responsive when it comes to addressing the needs of our customers. These programs, you know, aren't cookie cutter in nature. They're really tailored in a way to meet the needs of each respective customer. You know, again, we're in the early stages, but we have, you know, I believe one of the most robust portfolios of products or solutions in the industry.

Jason Ringblom: you know, we're in a unique position to leverage that, to drive value for all of those targets in the marketplace.

Yeah, thanks for the question, Stephen. What I would say is, uh, it's both, um, you know, I think at the end of the day, um, you know, I, I do believe that the integration of our 2 businesses that occurred, you know, roughly a year ago here at LP is is allowing us to be. I would say more creative more flexible, more responsive when it comes to, uh, addressing the needs of our, our customers, uh, these programs, you know, aren't aren't aren't cookie cutter in nature. They're really tailored in a way to meet the needs of, uh, each, uh, respective customer. So, you know, again, we're in the early stages. Um, but we have, you know, I believe 1 of the most robust portfolios, uh, of products, or Solutions in the industry. And, you know, we're in a unique position to leverage that, uh, to drive value for, uh, all of those Targets in the marketplace.

Operator: Okay, that's great. Looking at siding, it seems like the implied H2 margin a bit lower than the H1. Can you parse out how much of that is more builder series from these builder wins or higher ExpertFinish volume, which I know is a mixed negative for margin, even though it's on an upward trajectory on itself. Maybe you could talk through the H2 dynamics of siding margin.

Steven Ramsey: Okay, that's great. Looking at siding, it seems like the implied H2 margin a bit lower than the H1. Can you parse out how much of that is more builder series from these builder wins or higher ExpertFinish volume, which I know is a mixed negative for margin, even though it's on an upward trajectory on itself. Maybe you could talk through the H2 dynamics of siding margin.

Jason Ringblom: Steven, I'd say both of those factors are relatively small, compared to the overall volume decline and the raw material price increases that Alan mentioned earlier.

Okay, that's great. And then looking at siding, it seems like the implied second half margin a bit lower than the first half C. Can you parse out how much of that is more builder series from these Builder wins or higher expert finish volume, which I know is a mixed negative for margin, even though, uh, it's on an upward trajectory on itself. So maybe you could talk through the second half, dynamics of siding margin,

Yeah. Stephen I would say both of those factors are relatively small uh compared to the uh overall volume decline in the raw material price increases that Alan mentioned earlier.

Operator: Okay. Thank you.

Steven Ramsey: Okay. Thank you.

Okay, thank you.

Operator: Thank you. Our next question will come from Sean Stewart from TD Cowen. Your line is open.

Sean Stewart: Thanks. Good morning, everyone. A couple questions. The $200 million earmarked for strategic growth CapEx that was consistent quarter over quarter, can you remind us how much of that is ExpertFinish growth, and how much, if any, would be earmarked for Milwaukee work presuming you advance that project, is any of that total earmarked for that project?

Thank you. Our next question will come from Sean Stewart from TD Cowen. Your line is open.

Thanks, good morning everyone. A couple questions the 200 million uh, earmarked for strategic growth capex. That was consistent in quarter over quarter. Can you remind us how much of that is expert finish growth?

And how much if any would be earmarked for.

Alan Haughie: Yeah. There's close to $100 million in here for ExpertFinish expansion. Not all of it, the new mill. Some of it New York, the continuation, the completion of the New York facility, New York upgrade. About $100 million there.

Manaaki work as you are presuming you you advance that project is any of that total earmarked for that project.

Yeah. There's um, there's close to a hund million dollars in here for expert finish expansion. Not not, not all of it. Um,

Jason Ringblom: $20 to 30 million dollars on the next major siding mill. call it $130 million of siding capacity expansion. Three-quarters of it is ExpertFinish.

Alan Haughie: $20 to 30 million dollars on the next major siding mill. call it $130 million of siding capacity expansion. Three-quarters of it is ExpertFinish.

that the new Mill, some of it New York, uh, continuation of the completionist of the New York facility, New York upgrade. Um, so about 100 million there. And there is, um,

20 to 30 million on the next major, siding mil. So we call it 130 million of siding capacity, expansion.

Sean Stewart: Okay. Thanks for that. Then, Alan, you touched on the log inventory build in Q1, which I guess is Canada and the Northern US. That seemed to be a bit larger than normal. Can you go into some of the factors there and how we should think about the unwind through the remainder of the year?

Three-quarters of it is ExpertFinish.

Thanks for that.

Jason Ringblom: Oh, yeah. The unwind will be just the normal course of consumption. We did do some forward logging as oil prices rose. I'm very pleased with the efforts of the team there to get ahead of some of the freight costs, 'cause obviously once we get the spring breakup, there's very little we can do. We got a little bit ahead of that. The majority of the remainder is very much in anticipation of siding maintenance projects that will mean that we need to get a little bit ahead on finished goods as well. It's actually a good piece of cost mitigation that really triggered it.

Alan Haughie: Oh, yeah. The unwind will be just the normal course of consumption. We did do some forward logging as oil prices rose. I'm very pleased with the efforts of the team there to get ahead of some of the freight costs, 'cause obviously once we get the spring breakup, there's very little we can do. We got a little bit ahead of that. The majority of the remainder is very much in anticipation of siding maintenance projects that will mean that we need to get a little bit ahead on finished goods as well. It's actually a good piece of cost mitigation that really triggered it.

And then Alan you you touched on the, the log inventory, bill, in q1, which I guess is Canada. And the northern us that that seemed to be a bit larger than normal. Can you go into some of the, the factors there and how we should think about the unwind, through the remainder of the year?

Oh yeah, the unwind will be just the normal course of consumption. We did.

We did do some forward logging um as as oil prices Rose. So um very pleased with the, the efforts of the team there to to get ahead of some of the freight costs because obviously once we once we get the spring break up, um there's very little we can do. So we got to we got a little bit ahead of that um and the the majority of the remainder is is very much an anticipation of uh siding.

um,

Sean Stewart: Okay. Okay. That's all I have for now. Thanks very much.

maintenance projects that will, uh, that mean the mean that we need to get need to get a little bit ahead on finished goods as well. So, um, it's actually a, a good piece of, uh, cost mitigation, um, that that really triggered it.

Okay. Uh, that's all I have for now. Thanks very much.

Operator: Thank you. Our next question will come from Kurt Yinger from D.A. Davidson. Your line is open.

Thank you.

Kurt Yinger: Great. Thanks. Good morning, everyone. Just wanted to sort of unpack the full year siding sales outlook. I mean, by my math, kind of high single-digit decline in volume. I think maybe a couple points of that would have been the destock in Q1. I guess how does kind of that underlying mid-single digit volume decline compare to what you're expecting from the overall market? I guess how what should we infer from that in terms of market share expectations?

Our next question will come from Kurt younger, from da, Davidson your line is open.

Great. Thanks and good morning everyone.

just wanted to, um, sort of unpack, the the full year

Jason Ringblom: It's an interesting one. You gotta. The really high level, like we think we're gonna perform relatively well as in growth in both offsite and ExpertFinish. This is fundamentally gaining market share. The rest of the market, the rest of the product lines, everything else that's not offsite and ExpertFinish is gonna be down, you know, high teens. That's where you see the greatest impact of the, let's call it the market reaction or reaction to the underlying weak market. Assume offsite and ExpertFinish are going to have modest growth and high teens decline in everything else. That's kind of the shape that we see emerging.

Um, I guess how does kind of that underlying mid single digit, volume decline compared to what you're expecting from the overall market. And I guess how how what should we infer from that in terms of market share expectations?

Alan Haughie: It's an interesting one. You gotta. The really high level, like we think we're gonna perform relatively well as in growth in both offsite and ExpertFinish. This is fundamentally gaining market share. The rest of the market, the rest of the product lines, everything else that's not offsite and ExpertFinish is gonna be down, you know, high teens. That's where you see the greatest impact of the, let's call it the market reaction or reaction to the underlying weak market. Assume offsite and ExpertFinish are going to have modest growth and high teens decline in everything else. That's kind of the shape that we see emerging.

It's an interesting one. Um, are you going to, at the really high level—like, we think we're going to perform relatively well, as in growth in both Offsite and ExpertFinish. This is fundamentally gaining market share, and then—

ABS the rest of the market. Um,

The rest of the product lines, everything else. That's not offsite, and expert finish, is, is going to be down, um, you know, High Teens. Um, and that's where you see the greatest impact of the, let's call it the market reaction, our reaction to the the underlying weak market. So assume offsite and expert finish are going to have modest growth and, uh, High Teens decline in everything else.

That's kind of the shape that we see emerging.

Kurt Yinger: Got it. I guess on ExpertFinish, the flattest volumes in Q1 and the mid-single-digit outlook for the year, is that a function at all of just kind of the capacity constraints that you've seen? How do we unpack that deceleration versus what we saw last year?

Got it. And and I guess on, on Expert finish, um, the the flattest volumes in q1 and and the mid single digit outlook for the year. Um,

Is that a function at all of of just kind of the capacity constraints that you've seen or how do we unpack?

Jason Ringblom: Yeah, Kurt, I'll take that one. We are still dealing with a little bit of the ExpertFinish allocation hangover, if you wanna call it that. We came off allocation, what was it, in February-ish, something like that. Now that we have visibility into channel inventories, we have noticed that, you know, they're a little bit higher than where we would like them to be, which isn't uncommon when you come off of a managed order file. We do believe the H1's gonna be maybe a little bit weaker than the H2, just due to our channel partners bleeding down inventories to more normal levels.

Deceleration versus what we saw last year.

Yeah, Kurt, I'll take that 1. Um, so we are still dealing with a little bit of uh, the expert finish, uh, allocation hangover if you want to call it that um, you know, we came off, allocation what was it in?

Kurt Yinger: Okay. Perfect. Appreciate the color. Thank you.

February is something like that. And, um, now that we have visibility into Channel inventories, we, we have noticed that, you know, they're a little bit higher than where we would like them to be, which is an uncommon when you come off of a managed order file. Um, so we do believe the, the first half's going to be maybe a little bit weaker than the second half just due to uh, our Channel Partners bleeding down inventories to to more normal levels.

Jason Ringblom: Thanks, Kurt.

Okay, perfect. Appreciate the call. Thank you.

Thanks, Kurt.

Operator: Thank you. Our next question will come from Mark Weintraub from Seaport Research Partners. Your line is open.

Mark Weintraub: Thank you. just wanted to follow up on the last question. Alan, you mentioned, you know, it is for primed and for some of the other businesses, some growth, that down in the mid high teens in some of the other businesses. Is that because customers, in part are moving from the businesses where you see yourself being down high to mid-teens into the areas where you are flat or growing? Are there two different dynamics going on here?

Thank you. And our next question will come from Mark. Winrow from Seaport research Partners. Your line is open.

Thank you. Um, just wanted to follow up on on the last question. Um, and, um, Allan you mentioned, uh, you know, it's for primed and for some of the other businesses, some some growth, but that down in the mid to high teens and some of the other businesses is that because customers, uh, in part are moving.

From the businesses where you see yourself being down high,

The mid teens into the areas where where you are flat or growing or are there 2 different Dynamics going on here.

Jason Ringblom: No, I think the Mark, I'll take that one. You know, I think the biggest dynamic we're dealing right now, well, we're mostly through it, was just related to the shed segment and how much inventory carried over into the new year. You know, I would say we're 85% of the way through that. There's still a little bit of excess inventory there. You know, we have really good visibility into our order file into Q2, but beyond that, there's just a tremendous amount of uncertainty looking out into H2. You know, we feel good about what we're doing in the new construction segment, feel like we can outpace housing starts in that segment.

no, I think the mark I'll take that 1, you know, I think the

Biggest Dynamic, we're dealing right now. Well, we're mostly through. It was just, um, related to The Shed segment and how much inventory carried over into the new year.

Jason Ringblom: In repair/remodel, we touched on ExpertFinish being up mid-single digits and, you know, that will be reflective of, we think a better performance than the R&R segment as a whole.

Mark Weintraub: Okay. It sounds like it's really sheds is where the source of the relative performance is gonna be, you think, soft this year versus your historical algorithms against overall market growth. Is that fair?

Um you know I would say we're 85% of the way through that there's still a little bit of excess inventory there. Um you know we have really good visibility into our order file into Q2 but beyond that there's just a tremendous amount of uncertainty looking out into the uh the back half of the year. So um you know we feel feel good about what we're doing in the new construction segment feel like we can outpace um housing starts in that segment and then and repair a model. Um we touched on on Expert, finish being up mid single digits and you know that will be uh reflective of um we think a better performance than the RNR segment as a whole

Okay. So so it sounds like it's it's really sheds is where the the source of um relative performance.

Jason Ringblom: Yeah, I agree with that. I mean, we pay close attention to sell-through rates in that segment. We get data from our distributors and, you know, we're pleased to see that those sell-through rates have, it's held up, you know, quite well. It is really just an inventory dynamic that is playing out in 2026.

Mark Weintraub: Okay, great. One last real quick one kind of related to all this too. Maniwaki, can you remind us, is that particularly well-positioned if, you know, the growth in primed continues to be, well, primed continues to be a main focus or not necessarily?

Uh is going to be you think, soft this year uh versus your historical algorithms against overall market growth? Is that fair? Yeah, I agree with that. I mean, uh, we we pay close attention to sell through rates in that segment. So we get data from our Distributors and you know, we're pleased to see that um those sell through rates of its held up, you know, quite well. Um, so it is really just an inventory Dynamic that uh is is playing out in 26.

Well positioned, if you know that the growth in Prime continues to be—Prime continues to be a main focus,

Or not necessarily.

Jason Ringblom: Yeah. Maniwaki is certainly an option for us. You know, if we went that direction, it would be, you know, the largest OSB plant that we've converted to siding. It would end up being our largest prime siding facility. Again, we're still in the process of assessing all of our options and are pursuing, you know, parallel paths in some cases.

Mark Weintraub: Great. Thank you.

Yeah, manaaki is is certainly an option for us. Um, you know, if we went that direction, it would be, you know, the largest uh OSB plant that we've converted to siding. It would end up being our largest uh, Prime, siding facility. Uh, but again, we're, we're still in the process of assessing all of our options and and our pursuing you know, parallel paths in some cases

Thank you.

Operator: Thank you. Our next question comes from Susan Maklari from Goldman Sachs. Your line is open.

Thank you.

Susan Maklari: Thank you. Good morning, everyone. My first question is on the siding side of the business. Can you talk a bit about how you're thinking of price elasticity? How within that growth that you're expecting in mid-single digits in ExpertFinish, is that reflecting how much of that is the underlying strength of the consumer relative to your share gains and some of those new products that you're introducing that also seem to be gaining momentum?

And our next question comes from Susan Mari from Goldman, Sachs, your line is open.

Thank you. Good morning everyone.

my first question is on the sighting side of the business, can you talk a bit about how you're thinking of pricey elasticity and how within that growth that you're expecting in of mid single digits and experts finish, is that reflecting the how much of that is the underlying strength of the consumer relative to your share gains and some of those new products that you're introducing that also seem to be gaining momentum

Jason Ringblom: Thanks for the question, Susan. Yeah, I'll talk a little bit about price elasticity. I mean, if you look back at our history and we typically go up or have a price increase one time annually, there might be a few times in our history, COVID being one, where we had a second price increase. You know, we really monitor both raw materials along with the broader competitive dynamics in our space to determine where we need to position pricing. You know, as it pertains to the current environment, I would say, you know, we're taking a wait and see approach, kind of no different than we did with our approach to tariffs last year.

Jason Ringblom: We don't wanna make a knee-jerk decision, due to what, you know, could be short-term circumstances that we're dealing with right now just in terms of raw material pricing. You know, our focus is gonna be on playing the long game and being as consistent and predictable as possible for our customers amidst, you know, all the factors impacting our pricing decisions for siding. We're, we're pleased with what we've realized in terms of the annual price increase that, you know, Alan spoke to earlier. You know, right now we're just holding steady.

Thanks for the question, Susan. Um, you know, I'll talk a little bit about price elasticity. I mean, we've if you look back at our history and we typically, uh, go up, uh, or have a price, increase, 1 time, annually, uh, there may be a few times in our, our history, Co being 1, where we had a a second, uh, price increase, but, you know, we really monitor, you know, both raw materials along with the broader competitive Dynamics, uh, in our space to determine, you know, where we need to position pricing, um, you know, as it pertains to the current environment. I would say, you know, we're we're taking a wait and see approach kind of no different than we did with uh, our approach to uh, tariffs last year. We don't want to make a knee-jerk decision. Uh, due to what, you know, could be short-term circumstances that we're dealing with right now, just in terms of raw material pricing,

Susan Maklari: Okay, that's helpful. Maybe shifting gears to OSB. Can you talk about your plans for production there? Do you still expect that the industry will see capacity come online this year, or has the housing backdrop perhaps changed those plans? Could we see something shift in terms of OSB supply as we move through the balance of 2026?

Um, but you know, our focus is going to be on playing the long game and being as consistent and predictable as possible for our customers amidst, you know, all the factors impacting our pricing decisions for siding. But we're pleased with what we've realized in terms of the annual price increase that, you know, Alan spoke to earlier. And, you know, right now we're just holding steady.

Okay, that's helpful. And then maybe shifting gears to OSB, can you talk about your plans for production there? And do you still expect that the industry will see capacity come online this year, or has the housing backdrop perhaps changed those plans? And could we see something shift in terms of OSB supply as we move through the balance of 2026?

Jason Ringblom: Yeah, Susan, I would say your guess is as good as mine is in terms of new capacity coming online. I mean, I can speak to obviously one of our competitors taking out a plant or plants coming offline kind of as we speak right now in Western Canada. You know, as it relates to OSB here at LP, I would just say our strategy really hasn't changed. You know, as we noted in our opening comments, we're proud of the way our team's navigating the current OSB environment. Just focused on operating with discipline and agility and, you know, I think over time, we've proven our ability to manage or control costs and continue to improve OEE or efficiency in the business.

Yeah, Susan. I would say your guess is as good as mine is in terms of um new capacity coming online. I mean I can speak to obviously 1 of our competitors taking out uh a plant or a plant's coming offline. Kind of as we speak right now in western Canada. Um you know as it relates to OSB here at LP I would just say our our strategy really has hasn't changed. And you know as we noted in our opening comments we're we're proud of the way our teams navigating the current OSB environment.

Um, just focused on operating with uh, discipline and and Agility. And, you know, I think over over time we've proven our ability to manage or control costs and, and continue to, uh, improve

Jason Ringblom: It's a cyclical business, but I'm confident that we'll be ready to take advantage of the next upward cycle whenever demand improves.

Susan Maklari: Okay. Thank you for the color, and good luck with the quarter.

Oee or efficiency on, uh, in the business. So, um, it's a cyclical, uh, business, but I'm confident that we'll be ready to take advantage of the next up upward cycle. Uh, whenever demand improves

Jason Ringblom: Thanks, Susan.

Okay, thank you for the color and go back with the quarter.

thanks, you

Operator: Thank you. Our next question will come from Adam Baumgarten from Vertical Research Partners. Your line is open.

Thank you.

Adam Baumgarten: Hey, everyone. Good morning. Can we get some color on how siding sell-through trended throughout Q1 and into Q2 so far? Any major change in trend?

And our next question will come from Adam baumgarten from vertical research Partners. Your line is open

Hey everyone. Good morning. Um can we get some caller on house siding sell through trended throughout 1 q and into 2 Q. So far, any major change in trend?

Jason Ringblom: Yeah. I'll touch on that, Adam. Appreciate the question. You know, we get data from our distributors on sell-through rates. We talked a lot about the inventory build from Q4 to Q1. That, you know, Q1 was gonna look a little bit weaker just due to the amount of inventory that we felt was held up at the two-step level. That ended up being largely true. Most of that inventory, as I mentioned earlier, has been depleted. Sell-through rates have more or less mirrored what we saw this time last year, just down slightly as it relates to the underlying market conditions in the new residential construction segment.

Held up, uh, uh, at the 2-Step level, um, that ended up being largely true and, and, uh, most of that inventory. As I mentioned earlier has been depleted, uh, sell through rates, um, have

Jason Ringblom: You know, no concerning trends at this point as it relates to sell-through rates. You know, seeing the normal seasonal uptick in those rates and, you know, hopeful that'll continue.

More or less mired, what we've what we saw at this time last year just down slightly as as it relates to the underlying market conditions in in uh the new residential construction segment. But um you know, no concerning Trends uh, at this point, um, as it as it relates to, to sell through rates, you know, seeing the normal, uh, seasonal uptick in those rates and you know, hopeful that'll continue.

Adam Baumgarten: Okay, great. Thanks. Then just when we were chatting at the Builder Show, I think there was some commentary around being pleasantly surprised about the interest about ExpertFinish from some of the builders. Did that play any role in one of those new partnerships that you guys mentioned?

Okay, great. Thanks. And then

Just, uh, when we were chatting at the Builder Show, I think there was some commentary around being pleasantly surprised about the interest, um, about ExpertFinish from some of the builders. Did that play any role in one of those new partnerships that you guys mentioned?

Jason Ringblom: Yeah, Adam, what I would say is it's, you know, playing more of a role than ever, but it's still a relatively small percentage of the business that's ending up going or bundled in these programs. It is, you know, it's a macro trend there that's in our favor. Labor's tight, and it's expensive. Builders are focused on, you know, job cycles, job site cycle times. You know, I think all of that, you know, plays into, you know, our favor as it relates to ExpertFinish and the new ExpertFinish Naturals Collection. We do believe that will be a trend that continues, and it's, you know, obviously why we're investing, you know, more in Green Bay, Bath, and North Branch, Minnesota going forward.

Yeah Adam. What what I would say is it's um you know, playing more of a role than ever. But it's still a relatively small, um,

Adam Baumgarten: Got it. Thanks, best of luck.

Percentage of of the business that's ending up going uh, or bundled in these programs. Uh, but it is, you know, it's a macro Trend there. That's in our favor, Labor's tight, and it's expensive. Uh, Builders are focused on, you know, psych job cycle, uh, job site cycle times. And, you know, I think all of that, you know, plays into, um, you know, our favor as it relates to expert finish. And, and the, the new expert finish Naturals 2-tone line. So, uh, we do believe that will be a, a trend that continues. And it's, you know, obviously, why we're investing, you know, more in Green Bay bath and uh, North Branch Minnesota, going forward.

Jason Ringblom: Thanks, Adam.

Aaron Howald: Thanks, Adam.

Got it. Thanks. Best of luck.

Operator: Thank you. I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Aaron Howald for any closing remarks.

Thanks Adam. Thanks, Adam.

Aaron Howald: Okay, thanks, everyone. With no further questions, we'll bring the call to a close there. As usual, be available for follow-ups. Stay safe, and we'll look forward to connecting again in the next quarter. Thank you.

Thank you. And I am showing no further questions from our phone lines. I'd like to turn the conference back over to Aaron Howald for any closing remarks.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a wonderful day.

Okay. Thanks everyone with no further questions. We'll bring you a call to a close there and as usual, we'll be available for follow-ups. Uh, stay safe and we'll look forward to connecting again in the next quarter. Thank you.

Thank you for your participation. In today's conference, this does conclude the program. You may now disconnect. Everyone have a wonderful day.