Kasia Strasky

Kasia Strasky asked about the siding volume pull-through from the home builder channel and how specific home builder relationships are evolving. She sought clarification on whether the current channel inventory buildup is expected to unwind during Q1, leading to a normalized steady state in Q2. She also inquired about the OSB segment's -29% EBITDA margins in Q4, asking if it was primarily due to low mill operating rates or if there were lumpy items like one-time inventory writedowns.

Answer

CEO Jason Ringblom noted regional variations in home builder strength, with northern markets stronger and Southeast/Texas softer. He highlighted LP's focus on leveraging its full portfolio to drive growth in the home builder segment, expressing encouragement from early builder reception to LP's integration strategy. He explained that while dealer channel inventories didn't significantly increase, two-step customers advanced purchases due to allocation and price increases, estimating 2-4 weeks of inventory at the two-step level, which he believes can be consumed by Q2. CFO Alan Haughie clarified that OSB inventory writedowns are standard mark-to-market adjustments, not exceptional, and CEO Jason Ringblom added that Q4 margins were mostly driven by utilization rates and price, alongside some large maintenance projects.

Kasia Strasky from TD Cowen inquired about the siding volume pull-through from LP's home builder channel, disregarding channel inventory buildup, and sought broader commentary on the evolution of specific home builder relationships. She also asked if the current channel inventory buildup is expected to unwind by Q2 and about the primary drivers of the OSB segment's -29% EBITDA margin in Q4, including any lumpy items or inventory writedowns.

Answer

Jason Ringblom, Chief Executive Officer, noted regional variations in home builder strength and discussed leveraging LP's full portfolio to drive growth in the home builder segment, with encouraging early reception. He confirmed that 2-4 weeks of two-step distributor inventory are expected to be consumed by Q2 due to seasonal demand. Alan Haughie, Chief Financial Officer, clarified that OSB inventory writedowns were standard mark-to-market adjustments. Jason Ringblom added that Q4 OSB margins were primarily impacted by low utilization rates, price, and some significant maintenance projects.