Louisiana-Pacific (LPX) 3 Aug 212021 Q2 Earnings call transcript

Good day, and thank you for standing-by. Welcome to the Louisiana-Pacific Corporation Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. now today, hand Aaron would to conference I speaker your Howald, Instructions] like the to over [Operator Investor Relations. sir. ahead, go Please

LP's Thank by quarter. LP’s Director Officer. I'm morning, Executive us good Alan well I'm as Chief quarter you, LP's you for as Brad is operator, joining the joined Haughie, Aaron outlook for and third of everyone. XXXX, Relations. today name and for this of Financial results Thank discuss Southern, Investor our morning the My second Officer; to Chief and Howald,

In a refer addition to this during a morning’s have will conference call, discussion. we simultaneous are and presentation hosting this we webcast to which uploaded we

and LP’s morning some regaring Slides X-K also statements www.investor.lpcorp.com. reconciliations of presentation herein All incorporate them the filing. investor necessary also X our metrics. some X-K and statements, We morning’s X on I Rather contains further presentation this appendix additional non-GAAP by financial detail relations with and reference. filed provide notices by of these website, these reading than this information. are accompanying the forward-looking that available The materials are supplemented

discussion numbers previously that, growth today's is where call would and with does is we and Trim therefore have the to reported different refer any SmartSide Siding. with of this consistent I over and to with we should to stress This any modification turn that which Siding branding. not require Trim I'll recasting Brad. an And includes said for Solutions, SmartSide. in and descriptor, developed newly materials, previously expanded addition in also Finally, SmartSide Siding products,

products records another us for mix QX are XX% everyone. LP's Thank Thanks, in indices second for that EBITDA quarter Solutions. segments LP discuss Aaron to demand Building robust, quarter, was in repair for we equally second very starts encouraged over quarter set our strong. results and remain and of and All and June, housing LP's you for for over the the with morning XXX,XXX joining single-family XXXX. remarkable remodel good sales

X brand Siding is net innovative well a accompanying of was primed Siding the than per presentation, significant will includes as to you component as million comp Solutions these X XX% SmartSide, which for COVID-XX. course in onset products $X.XX of due XXX% $XXX and compounded see reached and on by slide Solutions This of billion, earnings a of As strand-based by to results, $XXX million, as QX growth. slide illustrates. in XX% of more X% year. growth, was grew for volume Siding over names. prefinished weak Revenue QX composed last $X.X the cash under year, share. sales operating other compared Siding price growth generating sold of flow EBITDA Solutions is last

products In and and Solutions, contributed X% new addition innovative most X% gains, and is new Shakes market and point increase. than value-added Siding year QX. Smooth, to is more total product Siding This the in Siding, combined of compared and includes to X% for penetration SmartSide builder share which series one last the of to innovation, these growing LP's subset ExpertFinish through volume

weeks. Structural prices gains segment, OSB also important generated recent back cash Solutions flows, pulled overshadowed impressive in extraordinary have OSB LP's but in prices For volume.

solutions agility. and not supply wavered market strategy demand of from have We our structural growing

total by grew of compared we in a QX, Structural quarter. five as prior year Solutions OSB fact, points, percentage to In volume

inflation. segment in continue offsetting and with a a LP increases course strategy, cost prices America do not price a OSB quarter will OSB driver be share also repurchases, than LP's to minutes. which South While cash of Alan more and significant you driving very flow Siding of about had our raw few strong material update

and doubled to almost last year. sales EBITDA American tripled compared South

Let me Siding our in hold. projects, capacity expansion the you update with briefly conversion on beginning

While material subject on inflationary to particularly schedule. project is the pressures, still, been have costs

begin to SmartSide expect of Houlton production We in XXXX. in late QX

We currently to of there first production and XXXX. SmartSide are continue planning to the in the accelerate we start Sagola to conversion quarter work

our we our Finally, implementing and processes production production in incremental result are in distribution should capacity projects to optimize gains across that mills.

LP's for June. Board Valley that I'm Peace As in its OSB mill, late announce Valley happy first OSB pressed Peace to of

previous I Radiant want We a have shipping including Structural Solutions everyone product, in diligently, of to the efficient the impacts production contributed resumption In Valley them safe I our as responses idled, Certification that adhesives of that well it to while contributor as have of maintained resin operational so mitigate team Barrier, Valley. and at Peace disruptions. calls, these and to Peace else TechShield received quarterly to APA the thank was and LP's shortages congratulate significant growth. discussed

pressures expect some time demand the levels minimize and economy on chain working transformation As Sourcing teams disruptions. and our in our LP by but demand as the operations collaborating Raw XXXX and chain producer supply these quarter. than cases with US sectors prices is of grows. increasing. at back Consumer in includes severely inflationary intermittent was continue. expect any availability those now supply price inputs cases, fell some are as consumed challenges are XXXX, categories the materials economy Strategic above. the the upward. result, the In scarce recovery, as in elsewhere economy of COVID trend we hampered Most recovers significant case of for more resin saw to material broader the as therefore the in first to certain some did with now consistent we with teams is persist continues strategy, this This impacted been sectors raw Many MDI are has generally allocate fluid, indices prices even LP's with by situation to with diligently to price or resins. rebounding we The interruptions housing. decreases

our some better planned SmartSide ESG want environmental looks and product preview SmartSide Siding. briefly completed LP's competing to turn to alternatives. We detail, than the recently enhancements call financial review I I in disclosures. performs Before We that Alan for to believe to more declaration over performance

that, a have more financial repurchases for the to to With results we detailed will good and believe more an also we in a In a on QX. our Accounting turn share outlook our information SmartSide shows discussion footprint. plan Sustainability over Board, to strategy of it. believe quarters, and coming SASB update the framework. transformation Alan disclose We under is QX, story we sustainable forward the or with look much our is at to tell Standards additional smaller carbon to telling significantly We call I LP's for data LP. central Sustainability that

Thanks Brad, and good morning.

Siding revenue As segments in and grew for said, XX% records all America. EWP new and by Solutions Brad and OSB South has prices and EBITDA North significantly second set quarter. higher were both the already in revenue

EWP a In EBITDA million year last for Entekra doubled to compared increase tenfold record year. their fact last XXX than and for more of units And triple. sales with LPSA $XX over revenue, combined delivered a

of is first adverse consistent when appearance to $X and $XX other level. million. four and million spring. account includes high XX%. Inflationary of for The especially With incremental produced on EBITDA pressures that X of million XX%. increase and and last the are associated waterfall As result, to still revenue price and X% highest levels EBITDA selling last The Siding million accounting generated growth the impact adjusted XX% for its $X.X and and in represents return revenue $XXX with this EBITDA OSB discounts year Solutions ongoing freight, headwind the Builder transformation year-over-year a of subset prices made growth series This price million and anniversary in operating annual in the spending XXX price waterfalls of year materials the share. incurred impressive increase. remaining increases for softer total from Maintenance of EBITDA. flat $XXX revenue $X growth the prior generated the in show comparisons comparisons XX Siding per quarter. pre-COVID margin and summarizes spend of LP EBITDA our in strategy quarter growth earnings punches of $X.XX and million billion with X% their of in the points and the million just $XX total revenue Shakes with the $XX marketing of Houlton million of well includes in at segments. an additional of reduced $XX to presentation basis the million price for Notably of and Costs year-over-year of ExpertFinish Page EBITDA costs price OEE year-over-year second but X% and is compared sales, an of flow, wages, reductions reflects of increase making the cash in volume, from value-added which X $XX million. volume The Siding and slides raw for a EBITDA, XX%, $XX in above revenue conversion and points and products, weight over in points terms rebates. three packet percentage on Smooth list the saw

XX unscheduled less sales We of of with million second vestiges $XX up was increase revenue EBITDA OSB Solutions EBITDA. quarter production costs. contributed us impacted Structural Slide reduced This and XX% the High by also EBITDA. segment and margin by the driven input freight other OSB XX% OEE the only this to an $X X%, discontinued shows increases $XX which in adding OSB was $XX segment sales for yet for respectively and have revenue the quarter to revenue, extraordinary downtime $XXX The fiber dwarfed cost brings of obviously million us the cost more of million million And less the lastly and of for million XX% these million in Valley The inflation. I by an about the of the and of $X year-over-year Volume last Peace price XX%. quarter another as to of to unfavorable of segment said of million are quarter price factors million, but in flow million the cash waterfall of of is $XXX $XXX restart for an result in increase not detail and dominated scale net and as EBITDA generation. the elements increases $XXX EBITDA quarter. growth.

are driving by interruptions those particularly all cases, it As or also chain impacting you've their impact materials costs demand in and many precursor supply is seen more Brad when and consumed higher. Freight specifically increased upstream the disruptions impact some has suppliers In mentioned building involves our others industries. products widespread as suppliers.

categories for of the across from freight which saw All two Siding the $X cost significant waterfall while dropped. reflected year demand OSB in million to industry raw Recall million housing of segments. materials and tune last elsewhere for benefited the which $XX the the charts is in drops and same that

as raw to recovery cost inflationary growth Now represents XXXX of broader in blended raw flattened about underway up XXXX and XXXX. basis, about On the rate XX% the now or compared an about economic were period. materials to is X% unit but non-wood compared XXXX, prices X% compound are climbing. are This CAGR down a in have annual over material

inflationary in continue We One the the are in to Columbia guidance. quarter and pressures concerns and fires are chain to potential elsewhere third British expect supply they reflected contributor our West. in

shipping. we've are to employees and seen outbound So our far, and minimal inbound and safe facilities interruptions

We the closely with highest will monitor of priority. safety course as situation our continue to

Structural million on XXXX XX% in of shows over repurchasing steel million million LP third of strategic under be share through current on sustaining our total XXXX. the to shareholders, capital project be capital is as by spending of ongoing time will $XX $XXX other the $X.XX buybacks and now capital, revenue remainder as for strategy increase prior reflect to guidance repurchases, to quarter. midyear $XX Let billion expected in excess spending it a million shareholders availability and anticipate transformation, share Spending In June, remaining and increase of we more authorization. combination the brings $XXX shareholders for core repurchases guidance EBITDA $XXX driven flow This which assumes travel risk, XXXX, to to share OSB due the anticipate we've per a Siding costs we've $XX million continued aggressive to the leaves dividend returned on execution $XXX $X capital from quarterly count increased raising of and over And share $X.X businesses billion the required cash incurred me a embarked million in since $X.XX costs to to $XX $XXX largely or million of In turn operations to outlook. end EBITDA could to the Houlton early spent in some which labor. the investments and LP's maintenance updated me growth we million. than for restrictions bringing of XX% share. for sustain the contractor quarter in for result and at in per Solutions. bit outlay of which well allocation share shares at XX has an million. dividends. since its additional full Slide Furthermore, which $X.XX Solutions to for the easing share count decrease guidance full-year year in million grow declared order of, the million least to remains X of a and Siding return million from returned revenue an LP and reversal The We second $XXX conversion investment, consistently of about XX of and current growth under in

very the which Solutions hit stronger is comparative. growth For full remainder the by see business And of year year, another the will driven of will around growth increases XX%, if will our however, despite for third growth XX% to much that year-over-year growth half year-over-year Siding assume second capacity which result the we XX% be Solutions, quarterly would the This quarter revenue revenue for record bring long-term year the and production the be should with price shifts. guidance. revenue the double of Siding for this mix revenue near primarily

growth a we marketing margin But basis, last being investment EBITDA effects third to the projects EBITDA long-term will still guidance combined XX-month other our the selling cost However, increased of on input and inflation result below XX%. Houlton and and the quarter conversion meet trailing in expect year's. of

are order us prices although segment exceptionally volatile visibility. our some OSB right now the For near-term file gives

We're We of while also lag price and This are throughout Friday's movements this not roughly impact the from flat sequentially when movements guiding OSB assumption lower to Lengths we far. obviously, stay of the future the it's rising print characterization the second prices of is to last therefore useful Random a includes falling. than that remainder quarter. are price tend OSB so of prices, And the prediction hope when quarter. both they a revenue being XX% they

be quarter And so least events, caveats in for changes about quarter material and second the just that we'll with take your with EBITDA further certain which demand but the only $XXX expect finished not LP we will to will raw price be at unforeseeable third it. availability another to to million, questions. happy And or for be to quarterly record report we've other be

line [Operator Instructions] comes of America. of Bank Our first the question Babcock from John from

open. is line Your

some in with on of quarter. was just Siding congrats and working constraints I half guess customers of you're mean of running? demand the I useful. the capacity elsewhere, how this you that XXXX, morning or in Good shift color, can this of go the second customers light you hold expect year. have you to you starting wondering would on those when I Any out provide some do and into be have might

question. Great

since, working order So file with really we've been late last year. allocated

have stock any our been the customers to running we is extra locations meeting the understanding really our customers customers' our and early those their hasn't volume build fast to the have at grow under that either managed tight. we've been done done then what file network. a reap ability so given running safety job good interacting and to say of been and in that entire in I customers our even then I'll process needs. build as kind unable -- have We've producing across our really order order we've a channel. happened of good of volume John, our And with so think allocating job inventory And or needs scenario, to or orders been

to So we year, What any since the the stock down and good the been of market. safety provide in do QX able in COVID channel. is we feel -- product our extra haven't build to I about last ability inventory into shut

even growth side. high volume so the we're though, And a moderates, selling still quarter-over-quarter

feel our and substitution source the up production. I level going mill whole at good market the significant running until least about So believe extra to any get ability that for mix don't I there's on. distributor we supplying And at our

running. on the happening, substitution local their demand there's And in and really is feel marketplace at with, supply good volume market up the at. of making the the you to the until we're supply about build with got level that the get But based enjoying the quarterly directly basis, provide bit level. a meeting the it really we've where -- that's restricted step deal at But growth we in there it a about now I in than when made growth be be If into I product growth, shortages deeper feel distributors year-over-year we a our think look source or product any little focus chain markets. we've the sure product really in they going our contract will SKUs would we to Houlton right on if I change is need, now good supply. good on

OSB then, drop your where the in think sharp you next market from where in on Okay. the the here? you That's can going and now, the prices in just are OSB And and talk inventories right about very question, helpful. channel is week environment customer last demand thoughts initial

around on confirmation extra what's weaknesses some provide can we in -- been random retail. certainly at I the Well, published

our exposed we good pools. still little volume supply That that, tell think scale our what certainly, retail seen right into we I'll we competitors, of -- than bit about you of half of less some been We're but our very I given a there weak. be normal has now. mean retail. have We with would a

Some But on compare Lowe's, other it to Home wood related of aisle what ago. think, I July that the going products Depot XX you of season. consumer X than versus a the the places maybe year months may do holiday especially when at dollar, the and happening to so was prior be or

So we see weakness there.

some of But partners. obviously could our fall have next We the not to for that pricing. the they take given position, cheaper serious rest do seen kind now weakness in is OSB demand they week any really in in channel there candidly, distribution of maybe this week. expecting hesitancy than buy They’re it

So order file of short-term very our lot inventory is. pricing given excess where meet the to what enthusiasm buying type needs we're feeling channel replenishment There's distributors build to to just in orders. is a any in just not distribution

the So retail even distribution commodity hesitancy pools though falls, some pricing it of makes cheaper week. next weak, were volume there's inventory available, of given the fact which be because in to build that those could

is the your given But to that as weaknesses way. distribution, exists trends Certainly, repair recent with So my -- given answer good confirm underlying buy pools. there the can pricing. the summarize the we to the feel retail well, basic and indices and really question demand about let remodel question -- hesitancy in in in me we this a but housing strength

is to sounds can you next like talk how And running. first the you June. Peace that It brings all, kind guess, of in of guess, that started me up I just Okay. question. if I Valley then, about

also of you're now? recognizing guys mean, I provide if of the If update regarding rate trepidation run channel. keep there of to the you any what guess But any just on of sort having in And are demand you I I at timing sort start-up, piece there question. of is running? overall, out weakness kind some is sufficient of that last mean, then kind retail And this there the can

said June, I of assumes perhaps million the mill on square maybe think in square that the XXX bit get of out updates later you this year, around so that think to that XXX any a end in but had I feet to past feet the little that? million startup expected

And John, look XXX strong are there. Peace Valley customer mill good you the the units good mentioned, because that we in At about We decision. time we No. We're was I we that if originally million production. underlying good at for up, feet outlook started we a But square to being of good the housing being, than that going view started movements future. starts million started that the sticking feel a or feet to just past. questionable start about near-term reiterate feel up. did housing not X.X years going And the the to not housing where start, and industry XXX That's do on little the about like though to we million have plan our it the earlier we year, several for up for Valley outlook math the all feel Obviously, to current decision pricing reason land. is planned. build the we need demand. forecast even square you given feel to since we million it's we the of Peace we still start units did our few things that, up. where meet of as want if started the long-term to because the near-term a with pricing. decision, we into about felt said X.X enough, work the And near-term at you least we housing weeks needed

supported be it run going, continue feed to very volume. just was we out -- for partners, they quarters by that channel say as plan much we're need plan going channel is and year. our And with for believe So that partners several glad. volume because decision to that next that the that really And next we a up needed they to our been I'll has that see mill

decision that backing not all. we're of at off So

details. for Thanks great. Okay, the all

You're welcome.

you. Thank

of line Sachs. Our comes Maklari from Goldman Susan next from question the

open. now is line Your

Thank a everyone, on congrats great morning Good quarter. you. and

Susan. Thanks,

margins question Yeah. in Siding. the is My around first

running, on be continues to how come can of, and being and getting to of the you up closer progress to margins cadence to give next us the couple quarters? color Houlton over help the expecting just some through As we should

Yeah. the and at costs in margin see This the this take conversion of what year I'll Houlton least primarily experience margin -- That's is those Alan, fundamentally QX QX. on the one. the in the shoulders here. or the costs. We'll we'll hit of is

Thank you.

next question the from Our Capital Mamtora comes Ketan BMO of line from Markets.

now Your line is open.

when you retail Brad, Thank I was you. in of just demand kind I look at curious, -- OSB. mentioned the weakness in

Ketan, we can barely hear you.

Sorry you your to question? interrupt Can repeat you.

it better? is Aaron

thank Better thank Oh! you. you, ahead. Go

I was -- up about held are side, that Sorry in even or similar are a on curious you seeing that. you demand has better? siding, just the retail slowdown seeing

Ketan, into allocate good later production managed began a did in to question has not to been has us quite seen cadence siding, have it And that pools on than, order and volume and in OSB John's as it more that slowdown question severe, a but model. since distribution, and allowed we yes. slowdown we're has happened, back

Got you.

is it kind kind looking broad-based position? reduce So slowdown, or of kind sort is sort demand to of of of more distributors their it inventory of more

Well, channel beginning there was a channel think I are at don't their excess the price reducing looking position, in the because at of don't inventory okay, the -- I inventory think fall. of inventory the in any lot distributors

has over all I think remained the this lead channel year.

dramatically they we'd will And pattern buy is more have a lot to than to any going a normal that, it's everybody pricing there's needed absolutely anytime hesitancy see there's buy be So when more, a a just Conversely tomorrow. that's expectation lower to the be turns it's the it Ketan, -- especially going down just because what's to the has than think it past as as stampede pricing higher I is from few may standpoint, over today today. a on given distributor weeks.

So the line see that really your of we down. ends, price is on happening question Ketan? acceleration both either Did steep that on or answer kind up when

Thank you.

of Seaport the comes Research. question Mark from from line Weintraub next Our

now is line open. Your

you. I But Thank more so guess inventory Ketan's little back the in not is And was assume the not was bit side sheds you wonder question business pulling I bit which same weakness siding case. seeing I on sometimes? anything if that a the or which distributors a the whether in the DIY perhaps much more vein, are actually.

Yes.

I'm OSB Mark, question. certainly sure a make answering I question. about question yes, it sure to -- if good clear or I'm siding that's So, want make And me let

the So, pools as say are that And OSB. slowed from I manufacturers -- -- not would lot dramatically mentioned, we smaller retail. do retail for siding, shed as shed in there a product source have -- as of shed

the share the has contributed regional I I'm large So, sure our or there's that say to slowdown. larger strong. But polls share want or to national more for conversely remain manufacturers distributors

has DIY only weakness really So, the some we include does shed production. the DIY, in been segment would call it but that segment

I don't And off jump fast. to Got in cut real if going I'm it.

will methodological assuming just also is when that reflect as that are that's or guess and quick you're of does the any, as in at? what's guess flat month question to that And about in what drivers happen next you're real not maybe to OSB good as the look So, here, I talking best what to two? is just the asking or be OSB, differently, prices your going the kind as key that

Well, we anchor that Mark mean OSB guidance at pricing the I did I to it had I I'm is -- so forecasting the first to providing somewhere. is answer just comfortable method the pricing. the key of all driver just question we -- mean supply/demand not -- the but but

And pricing rest we guide how or overlay to channel lengths. for of are your the into we that far to for not how as to those forecast. retail. that translating having, inventories. but we from last I pulls have comfortable quarter you so we a the on to to the as to. say do order expectations I'm conversations trying feeling forecast it guys we're will I'm would variance what price that's And a And a I random see published spoke quarter, anchored spoke then of I I see as really comfortable what guess what you OSB kind

Understood. it. Thank Appreciate you.

Yes.

did for had queue, just if in those. back a not We follow-up follow-up, from people take me ask say Let the it's get good to a get be happy that off we'll to -- those question. intent our to cut you not

you. Thank

Securities. question next the Steuart from TD Sean of comes from Our line

now Your line is open.

if is of maintenance Thanks. CapEx quarter the guidance question for you give that's $XXX of it year million part specific little morning. looks figure forward? like CapEx. year to anything can $XXX inflation as the the we into from I'm the about number And the the the is provided range general a if CapEx most be million Good should that increment this or you A sustaining and thinking on higher midpoint a us going sustaining ago cost that higher of just there's bit this wondering context is if up feeding

Yes. It's one. that inflation of take is ahead the work. question. were and two factors and is and pull secure that There availability This One contractors a can playing we scarcity to feel engineers the us to is Alan whenever of expertise here, causing good other it. into is I'll we the the necessary

moment. that factors the both So, economic same of a we're caused fundamentally bit at -- conditions by there's the really little experiencing

growth us sense third Okay. into trending follow-up. this transparent topline quarter. there Products prices quarter in a Can for less Engineered strong America the both just a for markets. well how segments segments? of you And are quick South as Wood those are Those give those

Yes.

price LVL a We've than -- lumber OSB input let inflation on with product a hold on done with list. sort given do prices is It's the of OSB kind price our product there we're that So, we on veneer. some we EWP, a I-joist our segment, – margins is good lags. that typically, falling of sell of material, job it our not our based handout. with the but just that's within us like in traded and list. start are which price able supply and prices announced start of way And sale other me to as to

our there EWP pressure about will segment there. But pressure as competitive feel rates as continue in the competitive level. This input margin go maintain in we some we In of good forward. to near-term, So be reasonable pricing absorbed a South it's to magnitude year, obviously prices it's of is interesting that OSB experience while there been pricing our in increase XX the in of And America, states. stable. we've down seen price market not we've enjoyed down more Typically there. pricing the really much this years good fall,

So has influenced – our America, a look if been you America at that, easier but obviously, seen as North kind well. pricing lot but to a innate pricing South little the we've it's in get ability past stickier in the of

territory new price North of magnitude past in we're year. the the over America the in given change So

for we're think there. able hard one up. of in And been to really good what operationally. So it's we've I a what competitive able had or America. in get We're it there, for to North pricing predict three feel some good down maintain could kind if falls probably years are But do also I America operations the really shape go But at past, But running down margin able that to some lot. quarters other South I term, a say will make if comment the once in – point, be been several standpoint just imports as me shadows two comes we South pressure let we've near America. like in pricing from as from to there, that there

other our doing long time. as than down even there make has So system position some as price to it running And in a been better. mill raw down well cost it material there we're increases, is there has but investments – our

outlook America midterm the for business really good. is our So South

it. that detail. appreciate for Much Thanks

Thank you.

question next line Paul Capital comes from from Markets. Our RBC of Quinn the

open. now is line Your

siding guys. need sounds your it very you on until be will more pre-finishing much. something start that allocation just terms spend some customers that almost on on get morning, capability? Good are and Yeah. But to in is like you that Maybe And guys to of money up. capacity? Thanks holding you where increase

that last Board We approval capacity we Well, got growth looking the manufacture our continued expansion that prefinished with and both week at and in we're our for we within Northeast. of did of some question. great the currently facilities – viewed

a or Houlton segment expansion conversion. with So service we're operation there location conjunction for Northeast in prefinished to looking our the Houlton actively up to start a

talked and relatively of pre-finish incremental fortunately, slide. growth part that's the pre-finish. siding on to been world our we in is kind of the stretched investment and that so Alan the is required want And sustaining this The It utilize phenomenal. capacity to our – has conversions in of has there learning capital in growth OSB technology We're small. the that

paint and through If systems place. you companies had in were different acquisitions recall two those our two acquired first forays

the we're greenfield our of that process standardizing having as mentioned platform. the in I Northeast. facility across And So in

it. as be we in there'll pre-finish grow So investment continued

all So we many that will product, our had our We product. product, a and second of say that should things to phase acquisition testing years about those make a to about to really on really that well right the three ability that be good – a now. we're there. and I come was strategy we We feel market way sell our talking

long strategy about down we doubling that prefinished So profitably over ability we're on to the and our really good our term. feel grow really

Okay. – siding product morph guys at? side something one And then with do come innovative the lookalikes? right the of ability Is And with has any up brick have over way. that to that competitors look lines, and you on have different one pretty now do looked to particularly some the you down stucco your

minty longer. that we had really selling Yes. Paul, contractor We're years was it learning. ago. some a a product any sophisticated panel several not pretty It stucco required actively

have And was supply. forgive in for trials But regions series substantial our in right us get from way, looking for the been looked around is focus we a is would on products that big siding like pretty big now in we on a builder area to know struggled decided more really a that that then find you're right of than really a system that we we pre-finish and we pre-finish you competitive that. required at. siding. the opportunity that certain as I to pieces over builder focus year corner that to in country detail that this in focused say And stucco are so to with our kind and being – our ancillary that But gives position builder. the more increasing for capitalize the us. second We training answer would of something with Probably have big is We're place see – as We so a me. that a not change other didn't penetration areas. the now and And economical launched that very contractors believe time stucco thing. that in finding the our materials to way advantage predominant converted with

where that's see us. coming for we the growth so significant several next over And years the

luck Great. That’s of and Best thanks. all I had.

Paul. Thanks,

you. Thank

comes from of Kurt Davidson. Our D.A. next question Yinger from the line

Your open. now is line

long-term lean in want good to now? the up makes talk of pre-finished Great. Thanks opportunity your you side. capabilities own on what you still versus Could your pre-finishing sense you internalize might percentage about partners and follow volume product? your of pre-finish to as then morning, And I about there, on the terms that everyone. just channel you wanted of terms kind in just what of think what

a Investor in of me a several said our that's I XX% – mix Day, good little being our long-term the And let we question. last next playing years. year see think we our how describe over bit that we is pre-finish. target And Yes, out

focused just gone say the – in have national the we me that So let East. caveat primarily

palette with our national color – are do and and XX XX regional colors we have in or under one-step we ExpertFinish very distributors feel us two-step that expanding brand distributors. a like West a for standard So of makes the partner attractive we

that backed pre-finish. play positions to well that us we think standard by grow really this So with color is a set national a the brand LP

that to in some manufacture we custom East, be prime going and Now, market for there's colors that a the pre-finish. we're not even always behind SKUs

what we're XX, our colors to can ExpertFinish the right do partner by in is some color, fill with their with – be now those that all to So is production through their are supplementing other cases niche as that our partnering independent primarily pre-finishers. serviced are supply being And XX we're all colors all that the that's standard West, say – with pre-finishers the I'll supplementing in us. much custom actually working the for local selling pre-finishers – In colors. custom that and pretty custom of production able being

we're East, in but ExpertFinish all production keep – the to trying So that in-house.

colors we to brand a also local think such the some is I supply caveat market to and pre-finisher. And pre-finish that substrate. I'll as out good ExpertFinish it sell one big substrate independently with custom to for to currently also that I of a around independent under pre-finishers and there that our that the so paint be manufacturing position – are is have network where on national and the So have could substrate it see playing other just -- always prime is our answer but pre-finishers to choice will so doing a choose well. easy good their product name The just substrate that national

Got it.

guess CapEx years, how on of million the touch that as for about And Thanks. guess level then, we or projects just I gain creep guys growth based color low a think think you $XX or just year. within capacity spending, within strategic of single-digit existing or couple the Okay. of can noteworthy about where this And any capacity something certain the Is there helpful. you a That's really would on Siding incremental great? on Can unlocking you be separately plan any I next do business. that? percentage

Yeah.

that excited about highest the a from product. product automating priced as That of one of capital of in pretty about the plant -- $XX highlights there. Manitoba capital that maybe be Shakes highest finishing the are So it -- we $XX putting We're high We're far are manufacturer million returns. that productive. capability are where SmartSide cost in much was that half in but shake One was million our relatively project. margin It's most that in in the manufacture. too. highly investment, as just high we the very will high project margin is products memory

corners. three-dimensional our automating Secondly,

making and corner trim taking we're pieces. So

think it piece. a of corner as So three-dimensional

is So part of innovative I've about talked growth. And as that our pre-finish capital well. then

about question do second Houlton on we the for extra Now part your productivity. invest how beyond of

board out there's up able more our under that this that because production look permitting more volume. of got in at we're was that meeting really we around, we managed projects, to optimize able order volume which in the some also mix frees a limited file we're facility all, and running one within in optimal But if situation service the obviously past -- like productivity levels with one this -- looking get of Michigan. running mills of so First market some to of we're environmental capacity approved otherwise of

X% if be let's X% it just really their we're make we're growth, really needs to X% or us allows could talking to customers SKU can are. we with our working footprint way and or meaningful Siding to optimize a say quarter. X% about can out sure with incremental production understand get what then volume in we our So a And work them that in

QX is of Siding will up when constrained and up next probably capacity deck respectability. we Houlton's an running hands fact be on business that now and some -- year all So that right within our the with given initiative until

we tweak we our product little way. focused we're innovation for for that of on So manufacture quarters or the ability let current just out a the that Siding strategic bit business. typically back can productivity, to our mill and system very to to feel several our over Siding answer The this SKUs summarize we high-return get capital either in the other about good up than so me conversions and and that are more that support growth seeing do next

Got it.

Okay. half guys. Well, Brad, back appreciate and in the all good luck color

you. Thank

you. Thank

the Markets. Our from Mamtora from next BMO Capital of line Ketan question comes

now line Your is open.

about If costs? particularly in think light on Thank through you. of Siding. how we strategically move remain continues additional to of the as inflation half question a do back you had pricing Brad, covering high I the year,

raw to over market. historically, of in Input higher obviously, able cost I'm We we pricing. in team. consistent of question. does margin I historical around almost topic are just brought as out to The interact about realize we that deforms be given historically. mean, we've guidance the price inform well. that And our material in been the increases the we when price -- years years a it's it Ketan great tried decision Siding have meetings there. to high our It's that a we conversation increases, with all decision talking

vinyl as and Paul we're competitive Now hard environment from mentioned, both in sidings. a other from from very

And specific. component strategy certainly regionally be SKU-specific so is that there channel and a can specific competitive positioning and our of pricing

we have while by escalation SKUs So -- goes the while each discussion only that pricing into raw of to regions. is how that one price is selling our each our informed factor price of overall material our in strategy about

your or on Ketan, question So answer it? think provide does that some color how we about

quarters there? on options. that's you side, looking Yes, update Any follow-up EWP talked of I a it do though, about at helpful. a Brad, but have couple did. the back

our value channel and solutions. mean We inside there We -- brand. is be somewhat So us -- our at we're than hoping this, would involved actively the options have we're didn't strategic Ketan and believe looking for structural channel and we together the months would we we're but evaluating I-Joist it was might The six also it's self-imposed process many hold to with went it partners is trying first a Truss there. slower announced LVL which if there's a active easier, are system I which to still we together. Stark I be guess of our focus of constraint be little partners and know ago alternatives evaluating under to when options.

So us one bit partners making as our to because go as plan versus far some -- like keeping evaluating individual by one. we the do value options selling there's channel little that's a longer causing each probably together business holding feel by

selective somewhat on we're because being of we're of So that at desire that ours. the looking options

closing time, Aaron back to for remarks. this questions. would At turn Thank to over further no showing I call the Howald you. like I'm

questions, for we Okay. speaking the and no safe Thank earnings there. Solutions will operator. soon. Thank Stay with forward quarter everyone. more again LP you you, conclude Building call to Seeing second you we'll look

for you Thank call. conference today's concludes This participating.

You may now disconnect.