LP Reports Third Quarter 2008 Results
LP Reports Third Quarter 2008 Results
November 4, 2008
NASHVILLE, Tenn.--(BUSINESS WIRE)--Nov. 4, 2008--Louisiana-Pacific Corporation (LP) (NYSE: LPX) reported today a third quarter net loss from continuing operations of $100 million or $0.98 per diluted share, on sales of $390 million. In the third quarter of 2007, LP's net loss from continuing operations was $55 million, or $0.52 per diluted share on sales of $473 million. Results for the third quarter of 2008 included an other than temporary impairment on investments of $89 million ($54 million after tax, or $0.53 per diluted share). Including discontinued operations, net loss was $111 million or $1.08 per diluted share for the third quarter of 2008 as compared to a net loss of $68 million or $0.65 per diluted share for the third quarter of 2007.
"The declining activity in the housing market, in both new construction and repair and remodeling, caused lower demand for our products at very challenging price levels. This led to very poor financial results in the quarter," said LP's Chief Executive Officer Rick Frost. "Business fell off even harder in September and remains basically paralyzed as a result of the banking and financial market crisis."
"In the quarter, we announced the indefinite closure of two more OSB mills (Athens, Ga., and Chambord, Quebec). Most recently we decided to delay the re-start of the newly constructed Clarke County, Ala., OSB mill. During the fourth quarter, we anticipate that most of our mills will be curtailed as much as they will operate. LP is currently implementing an accelerated right-sizing initiative to reduce LP's ongoing cost structure to current business levels."
At 11:00 a.m. ET (8:00 a.m. PT) today, LP will host a webcast on its second quarter 2008 financial results. To access the live webcast and accompanying presentation, visit www.lpcorp.com and go to the "Investor Relations" section from the main menu.
LP, headquartered in Nashville, Tenn., is a premier supplier of building products, manufacturing innovative, high-quality commodity and specialty products for its retail, wholesale, homebuilding and industrial customers. Visit LP's Web site at www.lpcorp.com for additional information on the company.
FORWARD LOOKING STATEMENTS
This news release contains statements concerning Louisiana-Pacific Corporation's (LP) future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters addressed in these statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, including the level of interest rates and housing starts, market demand for the company's products, and prices for structural products; the effect of forestry, land use, environmental and other governmental regulations; the ability to obtain regulatory approvals; and the risk of losses from fires, floods and other natural disasters. These and other factors that could cause or contribute to actual results differing materially from those contemplated by such forward-looking statements are discussed in greater detail in the company's Securities and Exchange Commission filings.
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
FINANCIAL AND QUARTERLY DATA
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------- -------------------
2008 2007 2008 2007
-------- ------- --------- ---------
Net sales $ 389.6 $472.5 $1,126.0 $1,328.3
Income (loss) before income taxes
and equity in earnings of
unconsolidated affiliates $(158.3) $(88.0) $ (366.8) $ (173.6)
Income (loss) from continuing
operations excluding (gain) loss
on sale or impairment of long-
lived assets, other than
temporary investment impairment
and other operating credits and
charges, net $ (39.0) $(25.4) $ (122.5) $ (85.5)
Income (loss) from continuing
operations $(100.4) $(54.6) $ (225.7) $ (106.2)
Net income (loss) $(111.1) $(67.8) $ (238.3) $ (128.4)
Net income (loss) per share -
basic and diluted $ (1.08) $(0.65) $ (2.32) $ (1.23)
Average shares outstanding (in
millions)
Basic and diluted 102.9 103.6 102.9 104.0
Calculation of income (loss) from continuing operations excluding
(gain) loss on sale or impairment of long-lived assets, other
operating credits and charges, net and other than temporary
investment impairment:
Income (loss) from continuing
operations $(100.4) $(54.6) $ (225.7) $ (106.2)
Other than temporary investment
impairment 88.7 - 91.2 -
(Gain) loss on sale or impairment
of long-lived assets 9.8 48.4 9.5 53.6
Other operating credits and
charges, net 1.6 (0.7) 67.7 (19.9)
-------- ------- --------- ---------
100.1 47.7 168.4 33.7
Provision (benefit) for income
taxes on above items (38.7) (18.5) (65.2) (13.0)
-------- ------- --------- ---------
61.4 29.2 103.2 20.7
$ (39.0) $(25.4) $ (122.5) $ (85.5)
======== ======= ========= =========
Per share - basic and diluted $ (0.38) $(0.24) $ (1.19) $ (0.82)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------- -------------------
2008 2007 2008 2007
-------- ------- --------- ---------
Net sales $ 389.6 $472.5 $1,126.0 $1,328.3
-------- ------- --------- ---------
Operating costs and expenses:
Cost of sales 382.2 446.6 1,130.0 1,275.9
Depreciation, amortization
and cost of timber harvested 27.0 27.2 80.4 83.1
Selling and administrative 36.6 36.7 115.8 115.2
(Gain) loss on sale or
impairment of long-lived
assets 9.8 48.4 9.5 53.6
Other operating credits and
charges, net 1.6 (0.7) 67.7 (19.9)
-------- ------- --------- ---------
Total operating costs and
expenses 457.2 558.2 1,403.4 1,507.9
-------- ------- --------- ---------
Loss from operations (67.6) (85.7) (277.4) (179.6)
-------- ------- --------- ---------
Non-operating income (expense):
Foreign currency exchange
gain (loss) 2.3 (15.0) 6.6 (30.5)
Other than temporary
investment impairment (88.7) - (91.2) -
Interest expense, net of
capitalized interest (12.4) (7.7) (36.3) (27.7)
Investment income 8.1 20.4 31.5 64.2
-------- ------- --------- ---------
Total non-operating income
(expense) (90.7) (2.3) (89.4) 6.0
-------- ------- --------- ---------
Loss before taxes and equity in
earnings of unconsolidated
affiliates (158.3) (88.0) (366.8) (173.6)
Benefit for income taxes (61.0) (37.5) (153.7) (79.7)
Equity in loss of unconsolidated
affiliates 3.1 4.1 12.6 12.3
-------- ------- --------- ---------
Loss from continuing operations (100.4) (54.6) (225.7) (106.2)
-------- ------- --------- ---------
Discontinued operations:
Loss from discontinued operations
before income taxes (17.4) (21.4) (20.5) (36.2)
Income tax benefit (6.7) (8.2) (7.9) (14.0)
-------- ------- --------- ---------
Loss from discontinued operations (10.7) (13.2) (12.6) (22.2)
-------- ------- --------- ---------
Net loss $(111.1) $(67.8) $ (238.3) $ (128.4)
======== ======= ========= =========
Net loss per share of common
stock (basic):
Loss from continuing operations $ (0.98) $(0.52) $ (2.19) $ (1.02)
Loss from discontinued operations (0.10) (0.13) (0.13) (0.21)
-------- ------- --------- ---------
Net loss per share - basic $ (1.08) $(0.65) $ (2.32) $ (1.23)
======== ======= ========= =========
Net loss per share of common
stock (diluted):
Loss from continuing operations $ (0.98) $(0.52) $ (2.19) $ (1.02)
Loss from discontinued operations (0.10) (0.13) (0.13) (0.21)
-------- ------- --------- ---------
Net loss per share - diluted $ (1.08) $(0.65) $ (2.32) $ (1.23)
======== ======= ========= =========
Average shares of stock
outstanding - basic 102.9 103.6 102.9 104.0
======== ======= ========= =========
Average shares of stock
outstanding - diluted 102.9 103.6 102.9 104.0
======== ======= ========= =========
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
September 30, 2008 December 31, 2007
------------------ -----------------
ASSETS
Cash and cash equivalents $ 165.5 $ 352.1
Short-term investments 143.9 180.1
Receivables, net 89.8 85.9
Income tax receivables 109.0 157.2
Inventories 207.6 212.1
Prepaid expenses and other
current assets 12.9 7.6
Deferred income taxes 17.8 0.5
Current portion of notes
receivable from asset sales 20.0 74.4
Current assets of discontinued
operations 3.1 6.0
------------------ -----------------
Total current assets 769.6 1,075.9
------------------ -----------------
Timber and timberlands 58.6 64.1
------------------ -----------------
Property, plant and equipment 2,348.3 2,257.7
Accumulated depreciation (1,250.6) (1,180.9)
------------------ -----------------
Net property, plant and equipment 1,097.7 1,076.8
Goodwill, net of amortization 278.4 273.5
Notes receivable from asset sales 258.6 258.6
Restricted cash 73.3 61.2
Long-term investments 58.1 152.9
Investments in and advances to
affiliates 189.1 198.2
Other assets 55.6 63.1
Long-term assets of discontinued
operations 5.0 5.0
------------------ -----------------
Total assets $ 2,844.0 $ 3,229.3
================== =================
LIABILITIES AND EQUITY
Current portion of long-term debt $ 125.2 $ 127.6
Short-term notes payable 26.6 45.2
Accounts payable and accrued
liabilities 185.5 222.1
Current portion of limited
recourse notes payable 20.0 73.5
Current portion of deferred tax
liabilities 4.4 4.4
Current portion of contingency
reserves 24.3 15.8
------------------ -----------------
Total current liabilities 386.0 488.6
Long-term debt, excluding current
portion:
Limited recourse notes payable 253.3 253.3
Other long-term debt 237.1 232.5
------------------ -----------------
Total long-term debt,
excluding current portion 490.4 485.8
Deferred income taxes 270.2 340.0
Other long-term liabilities 98.7 79.6
Contingency reserves, excluding
current portion 13.6 15.8
Minority interest 18.7 -
Commitments and contingencies
Stockholders' equity:
Common stock 116.9 116.9
Additional paid-in capital 440.1 439.0
Retained earnings 1,360.8 1,630.1
Treasury stock (297.3) (302.0)
Accumulated comprehensive loss (54.1) (64.5)
------------------ -----------------
Total stockholders' equity 1,566.4 1,819.5
------------------ -----------------
Total liabilities and equity $ 2,844.0 $ 3,229.3
================== =================
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
Nine Months Ended September 30,
-------------------------------
2008 2007
--------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(238.3) $ (128.4)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation, amortization and cost
of timber harvested 80.4 84.9
(Earnings) losses of unconsolidated
affiliates 12.6 12.3
(Gain) loss on sale or impairment of
long-lived assets 9.5 72.5
Stock based compensation expense
related to stock plans 7.4 5.2
Other operating charges and credits,
net 28.3 (2.0)
Other than temporary impairment on
investments 91.2 -
Exchange (gain) loss on
remeasurement (16.6) 37.2
Cash settlement of contingencies (15.2) (10.0)
Pension (payments) expense, net 8.2 0.3
Increase in warranty expense, net of
payments 14.4 (1.8)
Other adjustments 3.2 (6.5)
Increase in receivables (7.3) (31.4)
(Increase) decrease in income tax
receivables / payables 48.8 (25.4)
Decrease in inventories 9.9 21.6
Increase in prepaid expenses (4.7) (2.0)
Decrease in accounts payable and
accrued liabilities (16.2) (9.2)
Decrease in deferred income taxes (95.4) (22.0)
--------------- --------------
Net cash used in operating activities (79.8) (4.7)
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment
additions (88.3) (221.3)
Purchase of a business (45.4) -
Investments in and advances to joint
ventures (2.7) (4.7)
Receipt of proceeds from notes
receivable 54.4 -
Cash paid for purchase of
investments (216.0) (2,187.1)
Proceeds from sales of investments 287.2 2,517.0
(Increase) decrease in restricted
cash under letter of credit
requirements (12.0) (14.5)
Other investing activites, net 1.1 2.7
--------------- --------------
Net cash provided by (used in)
investing activities (21.7) 92.1
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 12.0 17.0
Repayment of debt (53.6) (0.3)
Net borrowings (payments) under
revolving credit agreements (16.1) 37.2
Purchase of treasury stock - (18.2)
Sale of common stock under equity
plans - 2.8
Payment of cash dividends (31.0) (46.9)
--------------- --------------
Net cash used in financing activities (88.7) (8.4)
--------------- --------------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS 3.6 0.4
--------------- --------------
Net increase (decrease) in cash and
cash equivalents (186.6) 79.4
Cash and cash equivalents at beginning
of period 352.1 265.7
--------------- --------------
Cash and cash equivalents at end of
period $ 165.5 $ 345.1
=============== ==============
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(Dollar amounts in millions) (Unaudited)
Dollar amounts in millions Quarter Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
-------- ------- --------- ---------
Net sales:
OSB $ 177.6 $228.0 $ 496.0 $ 640.1
Siding 117.0 122.2 347.7 357.2
Engineered Wood Products 63.4 92.5 189.2 258.4
Other 33.7 32.2 98.4 80.0
Less: Intersegment sales (2.1) (2.4) (5.3) (7.4)
-------- ------- --------- ---------
$ 389.6 $472.5 $1,126.0 $1,328.3
======== ======= ========= =========
Operating profit (loss):
OSB $ (27.8) $(31.7) $ (124.3) $ (140.8)
Siding 4.7 11.3 13.8 37.9
Engineered Wood Products (11.0) 3.3 (28.3) 13.6
Other (2.7) (3.5) (5.2) (4.3)
Other operating credits and
charges, net (1.6) 0.7 (67.7) 19.9
Loss on sale or impairment of
long-lived assets (9.8) (48.4) (9.5) (53.6)
General corporate and other
expenses, net (22.5) (21.5) (68.8) (64.6)
Foreign currency gains (losses) 2.3 (15.0) 6.6 (30.5)
Other than temporary impairment
of investments (88.7) - (91.2) -
Investment income 8.1 20.4 31.5 64.2
Interest expense, net of
capitalized interest (12.4) (7.7) (36.3) (27.7)
-------- ------- --------- ---------
Loss from operations before taxes (161.4) (92.1) (379.4) (185.9)
Benefit for income taxes (61.0) (37.5) (153.7) (79.7)
-------- ------- --------- ---------
Loss from continuing operations $(100.4) $(54.6) $ (225.7) $ (106.2)
======== ======= ========= =========
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL DATA
(Dollar amounts in millions, except per share amounts) (Unaudited)
1. Results of operations for interim periods are not necessarily
indicative of results to be expected for an entire year.
2. The major components of "Other operating credits and charges,
net" and "(Gain) loss on sale or impairment of long lived
assets" in the Consolidated Statements Of Income for the quarter
and nine month period ended September 30 are described below:
In the first quarter of 2007, LP recorded a charge of $5.0
million to reduce the carrying value of a sawmill mill located
in Quebec to the estimated sales price less selling costs.
In the second quarter of 2007, LP recorded a gain of $17.7
million associated with proceeds received associated with a
favorable verdict on a legal suit associated with our insurance
on hardboard siding and a gain of $1.5 million associated with a
settlement with the Canadian government on the reduction of
certain of LP's timber licenses in British Columbia.
In the third quarter of 2007, LP recorded a further gain of $0.6
million associated with a favorable verdict on a legal suit
associated with our insurance on hardboard siding, a charge of
$1.5 million to reduce the carrying value of a LVL mill located
in Hines, Oregon to the estimated sales prices less selling
costs and a charge of $47.3 million to reduce the carrying value
and associated timber assets of an Eastern Canadian OSB mill to
its net realizable value.
In the first quarter of 2008, LP recorded a net gain of $4.0
million associated with product related warranty reserves and
insurance settlements associated with LP hardboard class action
suit and other associated hardboard siding liabilities.
In the second quarter of 2008, LP recorded a loss of $15.6
million associated with product related warranty reserves in
connection with LP's hardboard class action suit; a loss of $48
million associated with LP's settlement of a product related
anti-trust litigation matter; a loss of $5.3 million associated
with a facility explosion and a loss of $1.2 million associated
with a contractor default on a construction project.
In the third quarter of 2008, LP recorded an impairment charge of
$9.9 million to reduce the book value of a non-operating
manufacturing complex in Quebec, Canada to its estimated sales
price less selling costs. Additionally, LP recorded a loss of
$1.6 million associated with severance costs related to two
recently announced curtailed OSB facilities.
3. Income Taxes
Quarter Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
Pre-tax income (loss) from
continuing operations $(161.4) $ (92.1) $(379.4) $(185.9)
Pre-tax loss from
discontinued operations (17.4) (21.4) (20.5) (36.2)
-------- -------- -------- --------
(178.8) (113.5) (399.9) (222.1)
Total tax benefit (67.7) (45.7) (161.6) (93.7)
-------- -------- -------- --------
Net loss $(111.1) $ (67.8) $(238.3) $(128.4)
======== ======== ======== ========
Accounting standards require that income tax expense for interim
periods be determined by applying the estimated annual effective
income tax rate, by income component, to year-to-date income or
loss at the end of each quarter, then adding or subtracting the
impact of any changes in reserve requirements or statutory tax
rate changes, if any. Each quarter the income tax accrual is
adjusted to the latest estimate and the difference from the
previously accrued year-to-date balance is adjusted to the
current quarter.
For the nine months ended September 30, 2008, the primary
differences between the U.S. statutory rate of 35% and the
effective rate on continuing operations relates to the company's
foreign debt structure and state income taxes. For the nine
months ended September 30, 2007, the primary differences between
the U.S. statutory rate of 35% and the effective rate on
continuing operations relates to the company's foreign debt
structure, state income taxes and the favorable resolution of an
outstanding state tax contingency.
The components and associated effective income tax rates applied
to each period are as follows:
Quarter Ended September 30,
-----------------------------------
2008 2007
----------------- -----------------
Tax Tax Rate Tax Tax Rate
Benefit Benefit
-------- -------- -------- --------
Continuing operations $ (61.0) 38% $ (37.5) 41%
Discontinued operations (6.7) 39% (8.2) 39%
-------- --------
$ (67.7) 38% $ (45.7) 40%
======== ========
Nine Months Ended September 30,
-----------------------------------
2008 2007
----------------- -----------------
Tax Tax Rate Tax Tax Rate
Benefit Benefit
-------- -------- -------- --------
Continuing operations $(153.7) 41% $ (79.7) 43%
Discontinued operations (7.9) 39% (14.0) 39%
-------- --------
$(161.6) 40% $ (93.7) 42%
======== ========
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
Quarter Ended Nine Months Ended
September 30, September 30,
------------- -----------------
2008 2007 2008 2007
------- ----- ----------- -----
Oriented strand board, million square
feet 3/8" basis (1) 1,037 1,384 3,134 4,192
Oriented strand board, million square
feet 3/8" basis 61 33 215 147
(produced by wood-based siding
mills)
Wood-based siding, million square feet
3/8" basis 208 176 643 665
Engineered I-Joist, million lineal
feet (1) 26 34 66 105
Laminated veneer lumber (LVL),
thousand cubic (1) 1,588 2,388 4,731 6,719
(1) Includes volumes produced by joint venture operations or under
exclusive sales arrangements and sold to LP.
CONTACT: Louisiana-Pacific Corporation
Media Relations:
Mary Cohn, 615-986-5886
or
Investor Relations
Becky Barckley, 615-986-5600
or
Mike Kinney, 615-986-5600
SOURCE: Louisiana-Pacific Corporation