Louisiana-Pacific - Earnings Call - Q1 2025

Executive Summary

• LPX delivered a clean quarter with consolidated net sales flat at $724M, Adjusted Diluted EPS of $1.27 and GAAP diluted EPS $1.30; Siding grew 11% YoY and expanded margins, more than offsetting OSB weakness; results were above Wall Street consensus on EPS, revenue, and EBITDA. Bold beat: EPS +$0.09 vs S&P consensus; revenue +$16M; EBITDA +$21.6M.
• Management raised FY25 Siding outlook to ~$1.7B revenue and $425–$435M Adjusted EBITDA, and guided Q2 Siding revenue to $445–$455M (~26% margin), while cutting OSB EBITDA outlook on commodity price softness; consolidated FY25 Adjusted EBITDA reset to $535–$555M.
• Capital allocation remained active: $61M buybacks (0.6M shares), $64M capex, and a quarterly dividend of $0.28 per share; liquidity was ~$1.0B at quarter-end.
• Near-term stock catalysts: robust Siding order file “on pace for a record” Q2 driven by ExpertFinish growth and share gains, alongside tariff uncertainty pressuring OSB pricing and mix.

What Went Well and What Went Wrong

What Went Well

• Siding revenue +11% YoY to $402M on 9% higher volumes and 2% higher prices; segment Adjusted EBITDA +17% to $106M with ~26% margin; “Siding order file is on pace for a record second quarter”.
• ExpertFinish momentum: management highlighted “records for both volume and revenue in ExpertFinish” in Q1; Naturals Collection launched at IBS to extend differentiated color palette and strengthen R&R positioning.
• Liquidity and capital returns: $1B liquidity at quarter-end; $61M buybacks and $0.28 dividend declaration, reinforcing confidence and flexibility amid macro/tariff noise.

What Went Wrong

• OSB headwinds: net sales -15% YoY to $267M on 11% lower prices and 4% lower volumes; segment Adjusted EBITDA fell to $54M from $90M YoY as commodity prices softened and mix shifted away from Structural Solutions.
• Tariff impact: ~$2M EBITDA headwind in Siding during Q1 with management assuming ~$12M full-year headwind if the regime persists; adds uncertainty to pricing and margins.
• Consolidated profitability down YoY: Adjusted EBITDA declined $20M to $162M despite Siding strength; GAAP net income fell $17M to $91M; gross margin compressed YoY (mix and OSB pricing).

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to—excuse me—welcome to the Q1 2025 Louisiana-Pacific Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising that 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, VP of Investor Relations.

Aaron Howald (VP of Investor Relations)

Thank you, Operator, and good morning, everyone. Thank you for joining us to discuss LP's results for the first quarter of 2025, as well as our updated outlook. On the call with me this morning are Brad Southern, LP's Chief Executive Officer, and Alan Haughie, LP's Chief Financial Officer. After prepared remarks, we will be happy to take a round of questions. During this morning's call, we will refer to a presentation that has been posted to LP's IR webpage, which is investor.lpcorp.com. Our 8-K filing, earnings press release, and other materials are also available there. As always, I will caution you that today's discussion contains forward-looking statements and non-GAAP financial metrics, as described on slides two and three of the earnings presentation. The appendix of the presentation also contains reconciliations that are further supplemented by this morning's 8-K filing.

Rather than reading those materials, I will incorporate them herein by reference. With that, I'll turn the call over to Brad.

Brad Southern (CEO)

Thanks, Aaron, and thank you all for joining us today to discuss LP's results for the first quarter. As you all know, 2024 began with volatility and disruption in the U.S. and Canadian economies. Tariff uncertainty has weakened consumer sentiment and triggered significant pullbacks in equity markets. Single-family starts fell by 6% in the first quarter, due in part to this volatility, as well as some unfavorable weather in the Southeast. The same factors also contributed to a softening in commodity OSB prices. Against this backdrop, LP's siding business continues to grow, expand margins, gain share, and realize higher prices. We also introduced new and more specialized products in the quarter that will add energy to the growth flywheel. While we are watching the macro backdrop closely, we see no signs of a slowdown in siding.

In fact, our order file is robust and remains on track for a record second quarter. As a result, we are raising our full-year outlook for Siding, as Alan will detail in a few minutes. Page five of the presentation shows a summary of financial highlights for the first quarter. Net sales in the quarter were $724 million. This is flat to prior year, as 11% growth in Siding offset lower OSB prices. EBITDA was down $20 million. To oversimplify a bit, lower OSB prices all flow through to EBITDA, and Siding growth has about a 50% incremental EBITDA margin, so $20 million EBITDA impact from these offsetting revenue changes is about what we would expect. However, OSB prices are temporary, and our goal is to make Siding growth permanent. Siding growth means leverage that drives margin expansion.

Our Siding business delivered a 26% EBITDA margin in the first quarter, and we expect more of the same in the second quarter. If you were able to join us in Las Vegas for the International Builders' Show, you might have seen our newest and most specialized Siding product. At IBS, we introduced the two-tone ExpertFinish products we are calling our Naturals Collection, which is designed to capture the look of stained wood. Our booth displayed six different pre-finished color combinations, each of which is available in both cedar and brushed smooth finishes. This new collection complements our existing 16-color palette and adds a new aesthetic while still delivering industry-leading durability and ease of installation. We are early in the rollout, but customer response has been very enthusiastic. About 14% of our volume in Q1 was from recently launched products, including about 10% of volume from ExpertFinish.

These products drive growth and contribute a positive mix effect on price. We are confident that our new product development pipeline will continue to contribute to growth, material conversion, and share gain for SmartSide. Before I turn the call over to Alan, I know tariffs are top of mind, so let me discuss them briefly. The EBITDA impact of tariffs in the first quarter was about $2 million for Siding. This was primarily from a retaliatory tariff imposed on U.S.-made products exported to Canada. We also saw some small impacts on imported raw materials. If the current tariff regime continues through year-end, Siding would see an EBITDA impact of about $12 million. This is the assumption we are making for the purpose of updated guidance.

We won't speculate about what changes or new tariffs might be announced in the future, but we can affirm what we have said in the past about the paused 25% tariffs with Canada. LP's products are USMCA-compliant, making them exempt from U.S. tariffs. If that were to change, which we do not anticipate, we have numerous contingency plans, including flexibility in our supply chains and our operating network. Tariffs could also be a factor in our pricing strategy. Finally, we enjoy the added flexibility of a billion dollars in liquidity. None of that would make us immune from tariffs, but we are confident that we could partially mitigate tariff impacts if the situation changes. Meanwhile, we remain focused on what we can control: safety, efficiency, product innovation, share gains, growth, leverage, and margin expansion.

In a very uncertain environment, the LP team kept their focus and executed our strategy with agility and determination. OSB prices have softened in recent weeks, but as I said a moment ago, our Siding order file remains quite strong. I want to take a moment to express how proud I am of our team members and to thank them for their efforts and dedication. I'll conclude by saying that I am very confident that our recent integration of the businesses under a CCO-COO structure, reporting to Jason Ringblom in his new role as LP's President, positions LP for many more years of strategic continuity and execution. I will turn to Alan for an update on segment results, cash flow, and our updated guidance before we take your questions.

Alan Haughie (CFO)

Thanks, Brad. Pages eight and nine of the presentation show the first quarter year-over-year revenue and EBITDA bridges. Both are fairly straightforward, but a few factors bear some discussion. For Siding on page eight, 9% higher volumes and 2% higher prices compounded for 11% revenue growth. Volume growth actually outperformed single-family starts in the quarter by 15 percentage points, consistent with ongoing material conversion and share gains, boosted by robust demand for panel products. LP's shed customers are experiencing what appears to be a sustainable recovery after a long period of soft demand following the surge they experienced during COVID. I should also mention that although the margin on panels is healthy, they are priced below lap, trim, and soffit. While panel growth boosted volumes and helped with margins, it also brought a negative price mix effect that offset the positive mix effect from higher ExpertFinish.

In other words, please don't infer any slowdown in ExpertFinish from the softer year-over-year price growth. On the contrary, the first quarter set records for both volume and revenue in ExpertFinish. Other variances in the quarter were minor, with a $5 million increase in selling and marketing spend and minor variances in labor, raw material costs, and freight netting to zero. Tariff impact rounded to about $2 million in the quarter, without which, and it bears repeating, the first quarter EBITDA margin would have rounded to 27% instead of the reported 26%. For Siding, despite the tariff-induced market volatility, it was a solid quarter for pricing power, growth, share gains, operating leverage, and therefore for margin expansion. That trend continues into the second quarter, in which Siding orders are on pace to set new records for both volume and revenue.

For OSB on page nine, the bridge is dominated by commodity OSB price fluctuations, as is so often the case. Lower prices resulted in a $32 million reduction in revenue and EBITDA. A mix shift from structural solutions to commodity, which is not uncommon in soft OSB markets, resulted in a net reduction of $13 million in revenue and $7 million in EBITDA compared to the prior year. Just as with the Siding segment, all of the variances were quite minor by comparison. Page 10 shows cash flow for the quarter. As you will recall, we typically use cash to build working capital in the first quarter, primarily log inventory to prepare our mills for the spring breakup. Working capital increases consumed about $74 million, with taxes, interest, and other costs combining for a further $24 million of outflow.

We invested $64 million in capital projects, spent $61 million to repurchase shares, and paid $20 million in dividends. This brought our ending cash balance to $256 million. Having recently expanded our revolving credit facility to $750 million, which I should add is completely undrawn, LP had a billion dollars in liquidity at the end of the quarter. To save you the trouble in Q&A, no, we are not planning to borrow from the expanded revolver to fund share repurchases. We will continue to earn the cash, invest in growth, and return cash to shareholders, in that order. This brings me to LP's updated guidance on page 11. As already stated more than once, commodity prices have softened recently, while siding appears to be on track for a record second quarter.

We anticipate year-over-year revenue growth in the 9-10% range for Siding, generating between $445-$455 million in revenue. An EBITDA margin of about 26% implies EBITDA between $110-$120 million. These results will not only be records for revenue and EBITDA, but would also exceed the volume record set during the peak of COVID demand, a year that saw almost 1.6 million housing starts in the U.S. For the full year, we now expect Siding revenue of about $1.7 billion and EBITDA between $425-$435 million. We're applying the same philosophy to our tariff assumptions as we did in our first quarter guide three months ago, namely that the current state continues through the remainder of the year, a state which leads us to expect roughly $12 million of tariff headwind in EBITDA.

Despite this, we've increased the midpoint of our guide by $10 million, which can be thought of as a $22 million increase in EBITDA from growth and leverage, partly offset by the $12 million of tariff impact. For OSB, with random lengths falling recently, a prudent modeling approach would be to assume that commodity OSB prices remain flat at last Friday's level for the remainder of the year, which is exactly what we've done. With that assumption, the second quarter OSB EBITDA should be in the $15-$25 million range. Extending the midpoint of that range through the second half of the year yields a full-year EBITDA estimate for OSB of $110-$120 million. Now, for the avoidance of doubt, this is not an attempt to predict actual commodity prices, but simply a conservative approach that we hope is useful for modeling.

In summary, it was a surprisingly clean quarter given the noisy and turbulent market backdrop. While consumer sentiment and commodity prices are being pressured by tariff uncertainty, our Siding order file seems to be weathering the storm nicely so far. With that, I'd like to open up the call for Q&A. Operator.

Operator (participant)

Thank you. At this time, there will be a Q&A session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. Please stand by while we compile the Q&A roster. Our first question today is from Ketan Mamtora with BMO Capital Markets. Your line is open.

Ketan Mamtora (Research Analyst)

Thank you, and congrats on a strong quarter in Siding. Maybe to start there, can you talk about sort of two or three key drivers for this out-performance versus single-family starts? And if you can just talk about sort of how the R&R piece of this demand is also holding up?

Brad Southern (CEO)

Ketan, I'd be glad to answer that. Thank you. Really, we have seen strength in the Q1, saw strength across our entire order file. If there was any weakness at all, it was at the home centers in Q1. We saw a particular improvement in shed orders compared to Q1 of last year, where we had a pretty weak Q1. The comp there was kind of easy. In order to hit the numbers that we did, we did see strength in both the R&R sector, as evidenced by the volumes of ExpertFinish that we sold, and then a little bit of a surprise that our new construction and normal two-step distribution business held up really well as well. It really was across the board strength in the order file, with particular strength on the shed side, as Alan Haughie mentioned with the panel sales.

Ketan Mamtora (Research Analyst)

Understood. Just as my follow-up, how do you feel sort of about inventories in the channel at the moment, given sort of the uncertainty around tariffs and just the macro backdrop? As you look at sort of both the home center channel and the pro channel, how would you characterize inventories? This is specifically to kind of siding.

Brad Southern (CEO)

Yeah. First of all, on the home center inventories, what we are pretty sure happened in Q1 was they pulled down inventories because we know that the sell-through for our products at the home centers was good, though our intake of orders in Q1 was not. There was inventory pull-down at the home centers. Now I would call those normal. In the channel, it is seasonally where it needs to be, given the fact that spring is breaking across the country. I mean, a little high compared to an annual number, but right where we like it to be as far as the seasonality. Some evidence of that is we are prompt on our order file in Siding, so distributors are able to get shipments depending on the SKU in two to three weeks.

There really isn't a need for distribution to build inventory because of our prompt delivery, given the fact that Sagola is running so good now. We feel good about inventories as it relates to the Siding. I'll go ahead and answer too on the OSB side. They may be a little lean right now, given the movement on pricing. I would say overall, the inventories for both products are where they need to be or a little light in the case of OSB.

Ketan Mamtora (Research Analyst)

Thank you. That's very helpful. I'll jump back in the queue.

Brad Southern (CEO)

Thank you, Ketan.

Operator (participant)

Thank you. Our next question is from Michael Roxland with Truist Securities. Your line is open.

Michael Roxland (Managing Director and Senior Equity Research Analyst)

Yeah. Thank you, Brad, Alan, and Aaron for taking my questions. I'll just echo Keaton's comments. Congrats on a very good quarter despite the backdrop.

Brad Southern (CEO)

Thank you. Thanks.

Michael Roxland (Managing Director and Senior Equity Research Analyst)

Just one thing. In terms of your siding margin, I wanted a sense of how we should think about the progression of that margin in the back half of the year, maybe into 2026, particularly as you're expanding Holton, you're pursuing a second investment. Your guidance also seems to imply some margin weakness relative to 1-H. That could just be conservatism or cautiousness. I get that. Shouldn't siding margins, as you convert Holton, tend to trend down? If so, when do you expect that to take place?

Brad Southern (CEO)

Yeah. I'll start with the question about the second half. Yeah. Speaking frankly, we always have produced what we like to think of as a safe forecast. Obviously, some of the conservatism that I had baked into the first half, mostly in Q2, we've released. My fears around sort of unidentified inflationary costs have so far not materialized, thankfully. We are, of course, continuing to make sure that we provide adequate room for the operating flexibility that I so often tout as the, let's call it the reason for what is seen as margin conservatism. There's no, I would say I'd take the over on the second half versus the under, particularly given the non-materialization of my inflationary fears and the way the order file's progressing. In 2027, next year—what year is next year? 2026. Sorry. Just left over 2026. Yes.

All other things being equal, we should see some margin expansion in 2026 because there'll be no material impacts on the profit side from the investments in the new capacity. They won't be hit until at least 2027.

Michael Roxland (Managing Director and Senior Equity Research Analyst)

Got it. No, I appreciate that, Alan. Thank you. Then just one quick follow-up on OSB. Obviously, capacity continues to be added there. You have a peer that is now looking at adding, in addition to adding capacity in Canada, maybe considering a new facility in Alabama. Your thoughts around OSB, maybe shift to more value-add over commodity, maybe try to expedite the shift away from, or just in general, try to shift away or continue to shift away from OSB into siding? Any thoughts you have about OSB and the competitive dynamics there? Thank you.

Brad Southern (CEO)

Yeah. So obviously, the competitive dynamics are playing out right now in a somewhat weaker housing market than we wish we had this time of year and this year. As you mentioned, Mike, with the capacity that came on last year, that's certainly being felt in the market right now and is showing up in pricing. I'm still bullish on OSB in the long run. As housing recovers, we're well-positioned given both our Structural Solutions and the bit of the commodity that we still manufacture to be a very efficient supplier with a really wide network that's appealing to the national builders. We are at one of those times right now where the industry is having to absorb some new capacity at a time of relatively weak demand.

That leads to conservatism in distribution on taking in inventory because they can get prompt orders and prices have been falling. We are having to ride through that over the next little while. I still like the OSB for the OSB business that we have today for the long run. As you mentioned, our focus is growing Siding, converting facilities when we can, and enjoying the stability that that brings to our business while also having the optionality on an OSB business that can generate a lot of cash in even a moderate market, but certainly in an up market.

Operator (participant)

Thank you for your question. Our next question is from Steven Ramsey with the Thompson Research Group. Your line is open.

Steven Ramsey (Senior Equity Analyst)

Hi. Good morning. I wanted to think about the order file a bit and how much of the success in your order file reflects marketing investments if you think it reflects 2023 spending or more recently in 2024, just trying to gauge the success of that investment and the time lag from spend to bearing fruit?

Brad Southern (CEO)

Yeah. Listen, the investment we've made in repair and remodel, residing, emphasis that ExpertFinish has brought to us has been a long spend, really. We started ramping up when we got off the allocation for COVID, when we started to have extra capacity to sell. That investment has been strategic. It is ongoing. We are seeing the fruit of that in the ExpertFinish order file and other products that get pulled along with that. That will be, that's not a one-time slug of marketing and sales ads that you do and then you back away from. To be successful in repair and remodel, you have to have a brand, you have to have a presence, and you have to be top of mind when it comes time for a reside project.

I'm encouraged by the progress we've gotten off of that investment, and we will continue to invest to drive growth there. Marketing, not so much a factor in new construction where it's more about working directly with the builders and the contractors to get the product trialed. For the DIY and R&R sector, that's investments that we're starting to see good returns off of. Let me add too that I think a key driver to the order file has also been our investment in product development and innovation. What, six years ago, we didn't have a pre-finished product. Now we have Naturals that have just been launched, the next phase of that. That's really opened up, made the accessible market for us much, much bigger.

I'm really, really proud of the progress we've made there, the very innovative way we've approached the adaptability of our substrate to meet the needs of a homeowner or a contractor. When I look ahead, I'm confident that as long as we can continue to make these market advancements and become more of a known brand in the U.S. and also continue to develop the portfolio, there's a lot of headroom for continued growth with our SmartSide product line.

Steven Ramsey (Senior Equity Analyst)

Okay. That's helpful. Color, and maybe this question builds on that topic that you were just discussing, Brad, which is the siding growth being so far above housing, the backdrop, at least more recently and longer term. I get that some of that is sheds coming back. But with ExpertFinish making up a larger portion of volume and sales, do you think the siding business decouples from starts when you think about the contrasting correlation? Maybe some of that depends on Builder Series success. So I'm curious, pulling up the Siding outlook and how it compares to housing and your long-term correlation and if it's changing.

Brad Southern (CEO)

Yeah. It's a great question, Steven. Look, about two-thirds of our, we estimate about two-thirds of SmartSide does not go into new construction now. You talk about shed, repair, remodel, home center business, and other things. That is certainly insulated from new construction, though there are some positive impacts new construction has on repair and remodel. Let's just keep it simple and say two-thirds of it is not new home construction-related. I will say, I think certainly part of the strength in our order file, even though new home construction is down relative to where it was at COVID, as Alan mentioned, we're gaining market share in new home construction because of our Builder Series product innovation that we launched right after the COVID cycle.

That market share gain in new construction, it was kind of all upside for us because we were relatively weak there up to five years ago. If you take the two-thirds of our business that's not associated with new construction and the one-third that is in the market share opportunities we have to gain there, that's worked out really good for us in the first half of this year, those two things. I've talked a little bit on the call already about repair and remodel and innovation, but I really see a lot of upside for us in new construction as well as our Builder Series product line gains credibility. We gain access to some new lumber yards and distribution opportunities. We'll continue to grow there as well.

We're still, in the big picture, have relatively low market share with large national builders.

Steven Ramsey (Senior Equity Analyst)

That's great, Colin. Thank you.

Brad Southern (CEO)

Yep.

Operator (participant)

Thank you. Our next question is from Susan Maklari with Goldman Sachs. Your line is open.

Susan Maklari (Senior Equity Research Analyst)

Thank you. Good morning, everyone. Thanks for taking the questions.

I want to start.

Brad Southern (CEO)

Thank you.

Susan Maklari (Senior Equity Research Analyst)

On the siding side of things. Good morning. As you think about the mix shift that you are seeing between sheds and then also some of the growth on the ExpertFinish side of things, any thought on how that mix will impact pricing this year? I guess too, as you just think about the underlying factors that are coming through between tariffs and perhaps some upward pressure on raw materials, any thoughts there on price as well and what we should be expecting over the next couple of quarters in siding?

Brad Southern (CEO)

Susan, we've implemented a price increase effective January 1. We feel like it was fully implemented by February 1. We probably have a little bit of just price uplift because of the price increase happening in Q2, which we certainly factored into the guidance. On the mix side, as Alan mentioned, the strength in shed was negative to pricing in Q1. We see that somewhat normalizing in Q2, but we could get an uptick. We're seeing an uptick on retail, home centers, which is also panel, so it can have a lower price impact. All of that being equal, I think the ExpertFinish improvement is going to kind of continue to be offset by the strength on the panel side of our business. Alan, I do not know if you want to add anything to that.

Alan Haughie (CFO)

All right. I would like to think that the Q2 year-over-year pricing will be a touch higher than Q1 with the net of all those factors that Brad outlined being slightly to the upside.

Susan Maklari (Senior Equity Research Analyst)

Okay. That's helpful. Maybe shifting to OSB, as you think about the builders' focus on affordability in this kind of an environment with rates holding higher, any thoughts on the implications that has for just, one, overall OSB demand, but then, two, I think you noted in your commentary that you are seeing a shift from Structural Solutions to some of the commodity product. Just any thoughts on the ability to better emphasize the value of Structural Solutions and the trends there over the coming quarters?

Brad Southern (CEO)

Susan, you've hit on it. The affordability issue right now is an overriding issue for the builders or top-of-mind issue, maybe not overriding, but top-of-mind issue. That tends to be negative to our mix of structural solutions. We're still continuing to invest and to sell into that. Right now, it's a tougher sale than it is in an upmarket on OSB. While we're totally focused on that strategically and trying to drive structural solutions growth, we are facing a headwind when we're in a relatively down market in OSB with all this extra capacity that's come on this year. We will hopefully see improvement in the second half, but I wouldn't be baking that in significantly to any forecasting that I was doing for the rest of this year.

Susan Maklari (Senior Equity Research Analyst)

Okay. Thank you for all the color, guys, and good luck with everything.

Brad Southern (CEO)

Okay. Thank you, Susan.

Operator (participant)

Thank you. Our next question comes from Sean Steuart with TD Cowen. Your line is open.

Sean Steuart (Analyst)

Thank you. Good morning. Just one question. We've seen a private competitor on the OSB side delay a conversion project for an OSB mill, and they are citing steel cost inflation and other inflation tied to tariffs as part of the rationale. I think last quarter, you guys laid out the rationale for the Holton expansion being that siding prices were rising faster than capital costs were and returns were being preserved. I'm wondering if the thinking has evolved there at all on the return profile for that project? Can you give us some context on how much of the capital for that project is locked in at this point, how much you're exposed to potential inflation there?

Brad Southern (CEO)

Let me speak to this strategically. I mean, to me, Sean, it's a very different investment. We think of it as a very different investment decision between Siding and OSB where we're generating demand, which, per an earlier answer, sales and marketing spend ahead of to try to drive that demand. We've also got stability of margins. The ability for us to continue to invest from a capital standpoint in Siding is the highest priority we have in the company. While the higher it costs to do one of these, the lower the return by definition. These projects and the Holton project in particular still has a nice return well above our cost of capital. I'll see if Alan can answer about how much has already been locked in because I don't know that top-of-mind.

Alan Haughie (CFO)

I know some of that.

Brad Southern (CEO)

Some of that has been.

Alan Haughie (CFO)

The majority is still effectively still open. I echo Brad's point. I think the message to take away from this is that it would take a hell of a lot of change for us to lose our nerve on our Siding, on accelerating capacity for us. My biggest fear is that no matter how fast we go, we'll be too late. Oh, late, let's say. Not too late. That's somewhat terminal. We'll be later than I would want us to be. It is full steam ahead.

Sean Steuart (Analyst)

Got it. That's useful context. Thanks very much, guys. That's all I have for now.

Alan Haughie (CFO)

Thank you, Sean.

Operator (participant)

Thank you. Our next question is from Mark Weintraub with Seaport Research Partners. Your line is open.

Mark Weintraub (Senior Analyst and Head of Business Development)

Thank you for everything. Obviously, Siding continuing to do great. I'm sure that's getting the attention of competitors too, one of whom is Mike.

Alan Haughie (CFO)

Mark, you're breaking up pretty badly.

Brad Southern (CEO)

We can't understand your question.

Alan Haughie (CFO)

Sorry, Mark. We can hear you, but it's very badly distorted and broken up. Could I ask you to drop off the call, call back in? We'll put you back in the queue. Hopefully, we'll have a better connection.

Mark Weintraub (Senior Analyst and Head of Business Development)

I will do that. Can you hear me better now?

Alan Haughie (CFO)

Nope. It's the same.

Brad Southern (CEO)

Good job. Thank you.

Alan Haughie (CFO)

Okay. We'll get you back. Operator, let's move on to the next one and then bring Mark back when he logs back in, please.

Operator (participant)

I'm sorry. We'll take a question now from Matthew McKellar with RBC Capital Markets.

Matthew McKellar (VP)

Hi. Good morning. Thanks for taking my questions. I think you mentioned a record quarter for ExpertFinish. Please correct me if I had that wrong. Could you maybe share any updated perspective on how margins in ExpertFinish are trending relative to the rest of the Siding business at this point?

Alan Haughie (CFO)

You can. They still have a way to go. Again, if this business was at any kind of maturity, then that would be a concern to me. But given its growth rate, that's not a concern. You should take that as a positive sign for the future improvements in EBITDA margins, as in fact, we raised the margin on ExpertFinish. Nope, the ExpertFinish pricing is great, but the margin is still a slight drag. As I've said before, hope it doesn't sound too political, but I am very confident in LP's ability to ultimately bring those margins onto something close to parity with the rest of the business on average. Currently, yeah, they're below, which is an opportunity.

Matthew McKellar (VP)

Great. Thanks for that. Last from me. One of your siding competitors announced a deal with a composite decking manufacturer. Do you think this transaction affects the competitive landscape in siding at all as the companies come together? Is there any kind of response you may be contemplating to this development?

Brad Southern (CEO)

We are very pleased with the market share gains we've made over the last decade in all aspects of our Siding business. We are confident in the product that we have is the best quality product on the market with a very high value proposition. I mean, it's a competitive environment out there, and we're fighting it out every day. We see no new risk associated with the transaction you're talking about. We have a long runway for growth. Except for the panel business, we're at low market share, both in repair and remodel and large builder new construction. We are focused on what we can execute and very confident we'll continue to have success across the board.

Matthew McKellar (VP)

Thanks very much. I'll turn it back.

Operator (participant)

Thank you. We are now rejoined with Mark Weintraub from Seaport Research Partners.

Mark Weintraub (Senior Analyst and Head of Business Development)

Thanks. Can you hear me any better?

Alan Haughie (CFO)

Much better. Sorry for the technical issues, Mark.

Brad Southern (CEO)

However, I'm sure the line will go bad again if we get a difficult question. Proceed again.

Sean Steuart (Analyst)

That could happen, although it was actually the question that just got asked, so I'm.

Brad Southern (CEO)

No.

Mark Weintraub (Senior Analyst and Head of Business Development)

That's not the case. I'm going to follow up on it, which is you had at one point talked about the possibility of adding another leg to your business as well. I mean, per the last question, the belief of that competitor is that there is a synergy because decking customers and siding customers often are doing the renovation at the same time and that that can be helpful. Do you have a perspective on that? Are there things that could, is that something that's sort of in your shortlist to find other opportunities that maybe would be helpful to growing your siding business over time?

Brad Southern (CEO)

Let me just ask, I'm going to answer it specifically and then a little bit more generally. We haven't focused on the fact we haven't recognized a correlation between someone that wants to install a deck also wants to reside their house. That's not something in our discovery that we've run across. On a more general answer to the question, keep in mind, particularly as it pertains to new construction and retail, home centers, we have scale in our company. We have the second-largest OSB manufacturer in the world, and we have the most exciting offering of siding products in the world, in our opinion, as well.

It has something to do with this reorganization that we did where we believe bringing that power or we have discovered that bringing that power consciously to the market does drive success and helps us execute our strategy. We have the scale that maybe others are looking for to be a key presence in the markets that we play in. I'd rather be partnered with, as a siding manufacturer, partnered with an OSB business than almost anything else that I could think of. When you talk about the third leg of the stool, that's not where we're focused from an M&A perspective.

The deals that we look at and we're almost looking at something all the time at some scale, it's really about is it something that would complement directly our Siding business and allow us to either grow that or our Structural Solutions business at a higher rate. That would be the things that would make sense for us.

Mark Weintraub (Senior Analyst and Head of Business Development)

Very helpful, Brad. Thank you. Just on the Section 232 investigations, everybody talks about it relative to lumber. Does that have any implications for OSB or siding depending on outcomes?

Brad Southern (CEO)

I don't think so. No.

Sean Steuart (Analyst)

Okay. Short and sweet. Thanks.

Brad Southern (CEO)

Yep.

Operator (participant)

Thank you. Our next question comes from Jeffrey Stevenson with Loop Capital. Your line is open.

Jeffrey Stevenson (VP)

Hey, thanks for taking my questions today and congrats on the nice quarter. I wanted to follow up as well on the potential merger of your largest siding competitor mentioned in prior questions. Do you think, Brad, there are potential near to mid-term siding share gain opportunities on the margin due to complexities around the integration and channel partnerships of the combined company?

Brad Southern (CEO)

We are aggressively pursuing market share growth across the board. I do not know if that, I cannot comment on how much this would help us with those market share gains, but we are relentless on getting them, and we will take any help we can get. I do not know specifically. We have not had a conversion to date because of the announcement. I mean, obviously, we are being aggressive, and we will continue to be aggressive as we sell into this market.

Jeffrey Stevenson (VP)

Great. No, that makes sense. It is good to see the recovery in shed demand. I just wondered if you think this is more of a case right now of easy comparisons, or do you believe it is a start of a sustainable recovery in market demand?

Brad Southern (CEO)

Yeah. No, I think it's just, I mean, it's always nice, it's nice 12 months later to have easy priors to compare against, but I do think it's a recovery. I mean, we see this in softening markets for housing that the shed demand tends to go up as people, and I'm making a very general statement, but the need for space. I'm not surprised, given the overall macroeconomics right now of the U.S. economy, to see shed coming back the way it has. I do think for a while it will be sustainable. This isn't just an inventory play or anything like that. The order file is really strong across the board there.

Jeffrey Stevenson (VP)

Great. Thank you.

Brad Southern (CEO)

You're welcome.

Operator (participant)

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

Kurt Yinger (SVP)

Great. Thanks. Good morning, everyone. Just one question on going back to new residential market share. I think at this point, the top 10 publics are about 40% of the new home market. Brad, you kind of alluded to historically your share on the kind of new resi side has been largely dominated by the smaller builders. I guess, is there a multi-year target you have in terms of kind of specifically penetrating that subset? I do not know if you want to stratify it as top 10 or top 50 or whatever, but I was hoping you could talk to that as well as in terms of converting that share. Is it something that you would expect to come in chunks, or is it really a region-by-region battle and still show up in more of a smooth share gain fashion?

Brad Southern (CEO)

It's chunkier than repair and remodel because repair and remodel is just a grind to get incremental share. It kind of comes steady but slow, where with the larger builders, it is program-related. You either get some of the volume or you do not, or you get half of what you asked for or you do not. It can be kind of chunky. After you get past the top three or four or five big builders, it probably will manifest itself kind of smoothly because we will be adding volume to the portfolio program by program. These programs run different time periods as far as one, two, three years. Some are signed at the middle of the year. Some are signed at the end of the year.

I do not think we will, and then, by the way, once you sign them, you have to ramp the market up to be able to service it. It will probably be, from y'all's perspective, there will not be any one quarter where we come in and say, "We got a big new big builder deal, and here is all the volume from it, and it is manifested this quarter." It will come as an overall growth to us. Internal to us, it does feel kind of chunky because it is kind of a deal by deal. It is not kind of. It is specifically a deal-by-deal thing, sometimes even at the regional level. I do not know how helpful that answer was. It is kind of all over the board, but that is how it feels to us. As far as setting goals, we have overall growth goals for that channel.

I'm not going to mention that here. It's got a little bit higher level detail than we like to give. We are leaning into that really hard. We find opportunities for growth on a continual basis. As I've mentioned before, we don't win them all, but we're winning enough for it to make a difference in our order file and to make a difference in our results as we've reported here today. I'm really encouraged by the continued progress that we have there. I'm really appreciative of our sales team that we've really worked to upgrade and to enable them with our innovation to be successful in that channel. I look at that whole opportunity and just see nothing but upside for us.

It's really encouraging to see the success there and to know that there's a long runway for us to continue to be successful there.

Jeffrey Stevenson (VP)

Got it. No, that's great detail. Maybe one follow-up. If I look back at kind of the 2020 Investor Day Presentation, you talked about kind of low-teens share in that new single-family channel. My guess is that's worked its way higher over the last couple of years. I guess if we were to specifically look at that top-heavy chunk of the market, is there a good way or maybe rule of thumb that you would have us think about kind of your market share with those large production builders at this stage?

Brad Southern (CEO)

Outside of Lennar, there's a lot of upside.

Sean Steuart (Analyst)

Okay. Fair enough. Thank you.

Operator (participant)

Thank you so much. I'm showing no further questions at this time. I would now like to turn it back to Aaron Howald for closing remarks.

Okay. Thank you, operator. Thank you all for joining us this morning and for bearing with us during our technical difficulties as well. With no further questions, we'll end the call there. We'll look forward to connecting again on the next call. Stay safe, and we'll talk soon. Thank you.