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Edited Transcript of LPX earnings conference call or presentation 7-Aug-18 3:00pm GMT

Q2 2018 Louisiana-Pacific Corp Earnings Call

NASHVILLE Sep 6, 2018 (Thomson StreetEvents) -- Edited Transcript of Louisiana-Pacific Corp earnings conference call or presentation Tuesday, August 7, 2018 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Michael E. Kinney

Louisiana-Pacific Corporation - Interim CFO & Treasurer

* William Bradley Southern

Louisiana-Pacific Corporation - CEO & Director

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Conference Call Participants

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* Chip Dillon

Vertical Research Partners, LLC - Partner

* Gail S. Susan Glazerman

Roe Equity Research, LLC - Senior Analyst -- Paper, Packaging and Forest Products

* John Plimpton Babcock

BofA Merrill Lynch, Research Division - Associate

* Ketan Mamtora

BMO Capital Markets Equity Research - Analyst

* Mark Adam Weintraub

The Buckingham Research Group Incorporated - Research Analyst

* Mark William Connelly

Stephens Inc., Research Division - MD & Senior Equity Research Analyst

* Paul C. Quinn

RBC Capital Markets, LLC, Research Division - Analyst

* Steven Pierre Chercover

D.A. Davidson & Co., Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q2 2018 Louisiana-Pacific Corporation Earnings Conference Call. (Operator Instructions) And as a reminder, today's conference is being recorded for replay purposes.

It is now my pleasure to turn the conference over to Mike Kinney, Interim Chief Financial Officer. Please go ahead.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [2]

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Thank you, Haley, and good morning, everybody. Thank you for joining our conference call today to discuss LP's financial results for the second quarter of 2018. I'm Mike Kinney, LP's Interim Chief Financial Officer, and I'm joined today by Brad Southern, LP's Chief Executive Officer.

As we've done in the past, we've opened up this call to the public and are doing a webcast, and the webcast can be accessed at www.lpcorp.com. Additionally, to help with the discussion, we have provided a presentation with supplemental information that should be reviewed in conjunction with the earnings release. I will be referencing these slides in my comments this morning. Also, we have filed our 10-Q and 8-K this morning with some supplemental information.

I do want to remind all participants on the call about the forward-looking statements comment on Slide 2 of the presentation.

Please also be aware of the discussion of our use of non-GAAP financial information included on Slide 3 of the presentation. The appendix attached to the presentation has some of the necessary reconciliations that have been supplemented by the Form 8-K filing we made this morning. Rather than reading these 2 statements, I incorporate them within this reference.

Now let me turn the call over to Brad.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [3]

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Thanks, Mike, and thank you all for joining us this morning.

I'll begin today's call with an overview of our results for the quarter followed by highlights from each of the segments, a review of the current market environment, the outlook for the second half of the year and our capital allocation priorities. Mike will then take you through our financial results in more detail, followed by the question-and-answer session.

Before I dive into this quarter's results, I'd like to take a moment to thank all of you who joined us at our May Investor Day at the New York Stock Exchange. We hope it was informative. Many of the themes we discussed at the meeting regarding our transformation and the progress we are making continue to play out in our strong results for the quarter.

Turning to our results, we are very pleased with our performance this quarter. In fact, this was the best second quarter for LP since 2004, driven by steady execution from our team across the business as well as continued positive macro and industry drivers. Siding, OSB, Engineered Wood and South America all delivered growth both sequentially and year-over-year.

Starting with Siding, we are pleased to report that, as anticipated, our Siding segment is back on track after some volume headwinds that we discussed last quarter. This was a record quarter for Siding with increases in net sales, EBITDA, strand volume and strand order intake. Pricing remained strong across all Siding product families, demand remained solid across all market segments and we continue to be on track to deliver on our anticipated 12% to 14% full year revenue growth target for SmartSide strand. Inventories for the SmartSide products are at normal levels.

As we expected, the impact of the residual transportation challenges in Canada moderated this quarter, and we expect the impact in the third and fourth quarters to be minimal. We currently estimate that the total impact for the year will be between $15 million and $16 million. We remain confident that the actions the railroads are taking to increase rail capacity and availability will ensure this issue is mitigated in the coming months.

We are making steady progress on our strategy to grow Siding and specialty products, with Siding reaching 30% of total revenue and 25% of EBITDA for the quarter. As Siding and specialty products continue to grow, we will continue to shift capacity out of commodity OSB, enabling us to further decouple our performance from the commodity cycle that dominates OSB.

We are also proceeding on time and on budget with the Dawson Creek, British Columbia, conversion project and continue to target first quarter of 2019 for the startup.

Finally, as noted on our first quarter earnings call, we are now separately reporting volume and pricing details for the strand and fiber units within the Siding business in order to provide investors with greater insight into the different volume and pricing dynamics of each business. Specific to fiber, earlier this year, we instituted price increases and have experienced volume decreases. Ultimately, we are confident that we are taking the right steps to enhance the profit profile of the fiber segment.

Turning now to our OSB results, despite the ongoing transportation issues in Canada, OSB delivered its best quarter since 2005. Our focus on increasing sales of our value-added OSB products continues to drive results as we delivered another quarter of record sales for both FlameBlock and legacy flooring.

While overall demand for our products remains robust and inventories are at normal levels, I would note that OSB pricing has, in recent weeks, come down from historically high levels. We have been surprised by the magnitude of the drop, given our estimate of the industry's effective DC ratio. That being said, we are closely monitoring customer demand and will adjust our production planning to match demand.

Turning to EWP, we continue to make progress on our ongoing initiatives to drive growth, improve operational execution and increase return on invested capital in the EWP segment. We delivered solid results for the quarter, our best since the first quarter of 2006. Once again, we delivered a healthy increase in sales, with sales up 19% year-over-year. Strong demand continued for LSL during the quarter, while we experienced softer demand for I-Joist and flat demand for LVL compared to prior year. EWP inventories are at normal levels.

Looking ahead, we expect some pressure on this segment for the second half of the year as input material prices for products such as lumber and web stock used in I-Joist are anticipated to increase because these materials are bought on a trailing average pricing program. As the overall pricing environment in the EWP market remains competitive, we will have less opportunity to pass through the increased cost by way of price increases. As such, we anticipate a go-forward run rate for the segment more in line with our first quarter results versus the high we achieved in the second quarter. Nevertheless, we are making progress, and our long-term outlook for the segment remains positive.

Finally, in LP South America, I'm pleased to report this segment delivered its best quarter ever, with $45 million in net sales and $12 million of EBITDA, both up year-over-year and sequentially. The pricing environment was strong in the second quarter, and we expect that to carry through into the third quarter.

In Chile, we delivered a record quarter and expect to deliver a record year. The Panguipulli mill expansion project continues to progress on time. We've had good success in Peru and Argentina following the opening of sales offices in both countries. I am very pleased with our progress so far in South America.

Finally, touching briefly on our investment in Entekra, we are in the planning phase, including the development and construction of Entekra's California-based manufacturing facility beyond the small pilot plant currently in operation. We still believe we are looking out into late 2019 before we begin to see any meaningful volume for that plant. We will monitor closely, and we'll keep you updated when we have something to report.

Before I hand off the call to Mike, I want to take a few moments to discuss our outlook for the remainder of the year as well as our capital allocation priorities.

We have discussed with you our goal to strategically deploy capital where we believe we can drive the greatest value for our shareholders while actively managing our balance sheet. We are delivering on that commitment.

During the second quarter, we deployed $39 million to repurchase 1.4 million shares, reaching a total of $71 million of capital deployed on the authorization approved in 2014 as of this call. We expect to complete the balance of the existing $100 million authorization in the third quarter. We also paid out another $0.13 dividend in the second quarter, our second payment since reinstating the dividend in February.

With the original $100 million authorization soon to be completed, our Board of Directors has approved a new share repurchase authorization of $150 million, which we will deploy opportunistically. This new authorization highlights the board's continued confidence in our business and outlook, our strong cash flow generation and our focus on returning capital to shareholders.

Turning to the overall market environment, the key indicators that impact our business remain positive: A combination of income growth and low unemployment. We remain optimistic that housing starts for both single and multi-family homes will remain favorable as builders report that traffic remains very strong even in a rising mortgage rate environment.

From a planning perspective, we continue to anticipate 1.3 million housing starts for the year. U.S. housing stock remains old and underbuilt, approximately 3 million homes relative to demand. And we have -- as we have mentioned before, demographics are improving as millennials begin thinking about purchasing a first home. We believe this will translate into a strong outlook for housing for the foreseeable future.

Balancing these positives are constraints on supply that dampen the housing recovery. These include a shortage of developable land, increased regulatory headwinds, labor scarcity and conservative lending.

In conclusion, we are well positioned as we enter the second half of the year to continue driving profitable growth and value creation. We are pleased with the broad-based performance across each of our 4 segments, especially the performance in Siding, as we continue to transition the majority of our business away from commodity OSB.

Looking ahead, we will continue to leverage our strong balance sheet to deploy capital to the highest-return opportunities while continuing to grow our specialty products business.

With that, let me turn the call over to Mike.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [4]

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Thanks, Brad.

I will begin my discussion with a review of the financial results for the second quarter of 2018. This will be followed by some comments on the performance of the individual segments and selected balance sheet items.

Moving to Slide 4 of the presentation for a discussion of the second quarter 2018 consolidated results. We reported net sales of $811 million for the second quarter of 2018, a 17% increase from the second quarter of 2017.

Net income was $163 million or $1.11 per diluted share compared to net income of $95 million or $0.65 per diluted share in the second quarter of 2017. Adjusted income from continuing operations for the quarter was $157 million or $1.08 per diluted share based upon a normalized tax rate of 25%. This compares to $84 million or $0.58 per diluted share based upon a normalized tax rate of 35% reported in the second quarter of 2017. Adjusted EBITDA from continuing operations was $242 million in the quarter compared to $167 million in the second quarter of 2017.

Turning to our results for the first 6 months of 2018, net sales were $1.5 billion, a 15% increase year-over-year. Net income was $254 million or $1.73 per diluted share, up from $150 million or $1.02 per diluted share in the first 6 months of 2017. Adjusted income from continuing operations was $250 million or $1.71 per diluted share based upon a normalized tax rate of 25%. Adjusted EBITDA from continuing operations was $401 million compared to $281 million in the same period of 2017.

Moving on to Slide 5 and a review of our segment results, starting with Siding, this segment includes our SmartSide and CanExel siding products as well as OSB produced on one line of our Hayward, Wisconsin, operation and our Dawson Creek operation. The Siding segment reported sales of $262 million, a 13% increase from the second quarter of 2017. Operating income was $63 million, and adjusted EBITDA was $71 million, representing an increase of $15 million from the second quarter of 2017.

For the quarter, SmartSide strand average sales prices were up 4% due to changes in product mix and a price increase implemented in the first quarter of 2018, with sales volumes higher by 15%. In the second quarter -- in SmartSide fiber, sales prices were up 11% while volumes were down 12%. As Brad noted, we raised prices on our SmartSide fiber products, which slowed demand as we continue to seek opportunities to position our fiber offerings to maximize return.

We produced about 100 million feet of OSB in this segment during the second quarter of 2018, which is about 25 million feet higher than the second quarter of 2017 as we continue to prepare for the conversion of our Dawson OSB mill into a siding mill later this year.

We estimate adjusted EBITDA from continuing operations associated with OSB products produced and sold in the Siding segment for the second quarter was $10.4 million compared to $4.7 million in the second quarter of 2017.

For the second quarter of 2018, as compared to 2017, CanExel prices were up 7% and up 2% in Canadian dollars, as the majority of these sales are made in Canada. Volume was down 18% in the quarter, primarily due to customers rebalancing their inventories and continued weak demand in Europe.

For the first 6 months of 2018, Siding segment sales were $489 million, an increase of 10% year-over-year. Siding operating income was $108 million compared to $90 million in the first 6 months of 2017. Adjusted EBITDA was $125 million compared to $105 million in the same period of 2017.

Turning to Slide 6, OSB reported net sales for the second quarter of 2018 of $387 million, up 19% year-over-year. Operating income was $157 million compared to operating income of $103 million in the second quarter of 2017. Adjusted EBITDA from continuing operations was $171 million compared to $118 million in 2017.

On a year-over-year basis, sales volumes in our commodity OSB were 3% lower, with sales volumes in our value-add products 4% lower. The reduction in the value-add products was tied to our movement in 2018 of the Dawson Creek OSB mill, which produces a portion of our TechShield Radiant Barrier in Siding. Pricing for OSB was higher by 25% in commodity and 23% in value-add on a year-over-year basis.

Generally, pricing for our value-add products trail the commodity increase based upon how prices are set. The increase in OSB pricing resulted in improved operating results of $76 million. Partially offsetting the higher sales price were increases in raw materials, primarily resin, and increases in manufacturing costs due to downtime related to logistics issues associated with our Western Canadian operation.

For the first 6 months of 2018, OSB segment sales were $701 million, an increase of 18% year-over-year. Operating income was $255 million compared to $164 million in the first 6 months of 2018. Adjusted EBITDA was $284 million compared to $194 million in the same period of 2017.

Please turn to Slide 7 of the presentation, which shows the results from our Engineered Wood Products, or EWP, segment. This segment includes I-Joist, laminated strand lumber, laminated veneer lumber, OSB produced at our Houlton, Maine, facility, plywood plus other related products. This segment also includes the sale of I-Joist and LVL products produced by the Abitibi JV or under a contract manufacturing agreement with Murphy Plywood.

For the second quarter, EWP sales were $109 million, up from $94 million in the second quarter of 2017. Operating income was $9 million compared to $5 million in the second quarter of 2017. Adjusted EBITDA from continuing operations was $13 million, compared to $9 million in the second quarter of 2017.

LSL volumes were up 34%, while LVL volumes were flat with the prior year. I-Joist volumes were down 7% compared to the same quarter last year. Pricing was up 10% in LVL, 8% in LSL and up 11% in I-Joist on a year-over-year basis. We raised prices on all of our EWP product lines, which slowed demand in I-Joist as we continue to maximize return based upon the higher input costs.

For the first 6 months of 2018, EWP reported sales of $210 million, an increase of 19% year-over-year. EWP operating income was $11 million compared to $6 million in the prior year period. Adjusted EBITDA was $20 million as compared to $14 million in the same period of 2017.

Moving on to Slide 8 of the presentation, for the quarter, our South America segment recorded record sales of $45 million, about $6 million higher than the second quarter of 2017. Operating income was $10 million, and adjusted EBITDA was $12 million, which is about $4 million higher than the second quarter of 2017. Pricing was up 29% in OSB and 7% in Siding.

For the first 6 months of 2018, our South America operations reported sales of $88 million, an increase of 15% year-over-year. Segment operating income was $19 million compared to $11 million in the first 6 months of 2017. Adjusted EBITDA was $23 million as compared to $15 million in the same period of 2017.

Turning to our costs for the quarter, total SG&A costs were $50 million compared to $47 million in the same quarter of 2017. For the first 6 months, our total SG&A costs were $101 million, up modestly from $96 million in 2017. These increases are primarily related to the increased investment in our sales and marketing areas. In terms of our unallocated costs, these were slightly higher at $28 million for the quarter and flat at $55 million for the first 6 months. Net interest income was higher by $4 million in the second quarter of 2018 as compared to the second quarter of 2017, driven by the higher cash balances and improved interest rates.

Please refer to Slide 9 of the presentation. As of June 30, 2018, we had cash and cash equivalents of $1 billion. Capital expenditures for the first 6 months of 2018 were $88 million. We are projecting capital expenditures for the full year at $200 million to $250 million, of which $115 million is for growth projects and $130 million associated with maintenance projects.

As Brad mentioned, through June 30, we purchased 1.4 million shares or $39 million. And through last Friday, we purchased another 1.1 million shares for $32 million, with $29 million remaining on our $100 million share repurchase authorization.

Additionally, we plan to take advantage of the tax reform act and accelerate $33 million of pension contributions into 2018, which would provide a tax benefit as well as reduce our pension costs going forward.

I also wanted to note that we did complete the last portion of our timber notes. As of June 30, we received a $22 million payment for the notes receivable. However, given how the calendar fell, we did not make the payment of the notes payable until July 2.

Thank you, Haley. If we could now go to the queue.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Mark Connelly of Stephens.

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Mark William Connelly, Stephens Inc., Research Division - MD & Senior Equity Research Analyst [2]

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Brad, I wonder if you could talk a little bit about market penetration in Siding. I mean, you've done really well. Housing's been really good. But even as housing slows, it seems to me that product still has a lot of room to grow. And I was wondering if you could give us a sense of some of the markets that might be less penetrated and how those market might differ from where you're getting your growth right now.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [3]

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Good question, Mark. As you know, we have, as a company, been really focused on single-family new construction across all of our products, including siding, over the past decade or so. The initiatives that we have in place that we are working on now really focus on diversifying that penetration, with our primary focus being further penetration into the Repair and Remodel segment.

We have a really good position in Repair and Remodel in the central part of the country now, kind of around our mill footprint. And we have a full-scale strategy in place to broaden that penetration to other zones in North America.

Multi-family, we also -- we're underpenetrated there as well. This year, we opened up a multi-family pricing desk. Those -- typically, that segment requires very competitive pricing, and so we are learning how to apprise and garner some of that business. We don't want all of it because of the impact it could have on margin, but there are times when that does fit our profit profile for the business.

And then finally, I'll talk a little bit about light commercial and what we call specified markets. And this is more of the commercial building, restaurant-type environment, where we are extremely underpenetrated, primarily because architects usually specify the siding to be used pretty early in the design process, and we have more or less been invisible in that channel. We were really introduced to having to be successful in that channel when we introduced our FlameBlock product line, which obviously requires specification at the architect and engineering level. So we're being -- have been able to piggyback learning opportunities about our siding offering along -- that complements what we've been doing with FlameBlock specification, and we're starting to see some traction there.

So those are the 3 areas we are underpenetrated in. I'd say the biggest volume opportunity, obviously, is in Repair and Remodel. We are really, really focused on that as a business. And then we are learning how to be successful in the multi-family and on the specified market or commercial side of the market as well.

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Mark William Connelly, Stephens Inc., Research Division - MD & Senior Equity Research Analyst [4]

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That's really helpful. Just one more. With respect to your new sales offices in Peru and Argentina, do you have targets for those yet? Or do you have a general sense of how much opportunity there is there?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [5]

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We have sales targets in both of those sales offices now. And while they're not huge sale targets, given the -- how new we are in both locations, we've exceeded those so far this year.

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Operator [6]

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Our next question comes from Gail Glazerman of Roe Equity Research.

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Gail S. Susan Glazerman, Roe Equity Research, LLC - Senior Analyst -- Paper, Packaging and Forest Products [7]

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Just in terms of the volatility in OSB pricing, I realize visibility might be pretty low, but can you give us your best guess on what drove it up during 2Q and what has sparked the magnitude of the correction that we've seen? And are you seeing any light at the end of the tunnel?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [8]

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Okay, Gail. So you called it a best guess, and so that's what I'll give you.

I think a couple of things. Well, what drove it up was demand, but also the logistics issues that the industry faced out of Canada, particularly Western Canada, restricted -- I mean, and I know, I'm just speaking for our business, restricted product flow out of our Western regional mills into the markets. So definitely, the logistics issues that the industry and we faced, I believe, constrained the ability to get manufactured capacity into the marketplace, and that had a favorable impact on pricing. And in fact, as we mentioned in the first quarter, we actually had to take some downtime because we filled up our warehouses at our Western mills and weren't able to get enough railcars to ship that out. And so we were taking downtime in the face of increasing demand.

I can't speak for the other OSB manufacturers, but I assume at least some of that happened at their locations as well.

So we had rising demand as housing started to take off early in the spring and we were still restricted in our ability to move product around due to the logistics issues. But I think that was probably the single biggest of what I'll call unexpected restriction on capacity that drove pricing up. Okay.

So then we -- then the second part of your question is what made it go down. I think one thing, the logistics issues got settled as we got into the second quarter. And that pent-up inventory that was at our plants or in reloads that were -- we were -- and we were not able to get into the market in Q1, moved into the market in Q2. Secondly, we had the 5 OSB mills that are starting up in various stages of introducing volume into the market. A couple of them are, from my understanding, are running pretty well. So we did have to absorb some new capacity coming on early in Q2.

And then I think when we got to July, we did just sense a softening in demand as we moved into the 4th of July holiday week, which is normal for us. But it seemed to be maybe a little bit more extended than we had anticipated -- or it was more extended than we anticipated. And so there was a kind of a pullback from demand pools early in July that, I think, obviously, moved prices down as well.

And so that's how I would call it. I mean, others that are in the market may see it a little bit differently. But that's how I view the drivers, as far as the spike up and the fall down.

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Gail S. Susan Glazerman, Roe Equity Research, LLC - Senior Analyst -- Paper, Packaging and Forest Products [9]

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Okay. That's helpful. And can you...

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [10]

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The only thing I would add, Gail, is that I think, as we've talked, the -- for the longer term, over the next 12 to 18 months, we still think the overall supply and demand is in balance; it's just that it's going to be choppy as we go forward, as the demand sways in the individual months. And then when you look at the -- how the capacity comes on at the individual mills.

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Gail S. Susan Glazerman, Roe Equity Research, LLC - Senior Analyst -- Paper, Packaging and Forest Products [11]

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Okay. And then also, if you can offer any perspective on where your current pricing is versus the 2Q average.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [12]

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Well, I mean, I think it's -- I don't know the comparison of where the Q2 average was. But if you look at the -- where it's printing today, that's what the pricing is.

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Gail S. Susan Glazerman, Roe Equity Research, LLC - Senior Analyst -- Paper, Packaging and Forest Products [13]

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Okay. And just as a reminder, should we be thinking about any kind of financial impact from the Dawson project as we look into modeling for the second half?

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [14]

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So Gail, how we've been talking about that is that if you look at when we converted Swan, it had about a $10 million impact in the Q3 and Q4. And so I think that number, plus or minus, between kind of Q4, Q1, is -- would be reasonable to have that from an expectation standpoint.

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Gail S. Susan Glazerman, Roe Equity Research, LLC - Senior Analyst -- Paper, Packaging and Forest Products [15]

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Okay. One just last one. Just, you've talked about inflation, expecting similar inflation in 2018 as you saw in 2017. Is that still your view? Or is anything better or worse than that?

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [16]

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Yes. Actually, we're right in line with what we said before. I think we were saying we were kind of in line with 2017 increase. And in our last -- latest forecast for 2018 over '17 is about the same, which is in that $25 million range.

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Operator [17]

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Our next question comes from George Staphos of Bank of America Merrill Lynch.

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John Plimpton Babcock, BofA Merrill Lynch, Research Division - Associate [18]

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It's actually John Babcock on the line for George. I just wanted to start out on this -- on the siding side of things. I was wondering if you could talk about your expectations for volumes for both SmartSide fiber and also the CanExel products, realizing there was a little bit of weakness in the first half.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [19]

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So we are in the process from within the market of raising prices for fiber, which we've done that now. We expected to lose some volume as a result of the magnitude of the pricing that we've implemented. But -- and I think that's beginning to settle out in the marketplace. The pricing has been in place now for several months, and so I would say my expectation is it would stabilize around the kind of volumes that we sold in Q2.

As far as CanExel, I don't see a lot of opportunity to make up the shortfall in the first half. And as Mike mentioned, and just let me remind you, about 1/3 of our business for CanExel is in Europe, and we have seen extremely soft markets there for that product. We're doing okay in Canada, but the demand pools in Europe have been disappointing, and I really don't see that recovering enough to offset the shortfalls in the first half of the year.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [20]

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John, the only thing I would add is that when you look at the volume in that -- for that product, it's a very small volume. I mean, that mill has a -- is running at 50 million feet a year, if that. So it's a very small volume on the overall piece. And we were -- if you look year-to-date, we're down 14% on volume. I think if you go back to full year 2018, we were, like, plus or minus, like, 15% up. So it was up quite a bit '17 over '16, and some of that goes back to that little bit of pull-forward we talked about.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [21]

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And just keep in mind, too, when you're looking at our sales, because the product is exported to Europe, and primarily to France, the inventory situation over there can really cause big swings in our order file as they built up inventory late last year and then have to work through it. So there's just a little bit of -- more of an inventory challenge in that business because we're exporting it.

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John Plimpton Babcock, BofA Merrill Lynch, Research Division - Associate [22]

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Okay. That's very helpful. And then the second question I have, as you think about your OSB mills, do you see opportunities to perhaps debottleneck or improve the overall efficiency and/or output of certain mills?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [23]

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Absolutely, we do. A major initiative in our OSB business is around a focus on OEE, which is a measurement of basically how well we're operating the assets to get production out per their capacity. And as I've mentioned before on these calls, over the past decade, as we have, appropriately, in my view, invested in our Siding business to grow the Siding business and to grow the capability of the Siding business, we had to make decisions around capital investment that were somewhat biased to the Siding business at the expense of the OSB business as far as keeping the technology up to date. So we have opportunities there, not only -- not just with capital, but also improved operating metrics, to really improve our productivity, our cost position in OSB. And as -- other than growing our value-add part of that business, that is as important an initiative we have anywhere in our company. And it is a huge opportunity for us, obviously, given the capacity we have in OSB.

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John Plimpton Babcock, BofA Merrill Lynch, Research Division - Associate [24]

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And are there any specific projects you have in mind for next year or so as you're kind of going through that work?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [25]

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Well, let me just give you some general ideas about what happens from a machinery standpoint in order to improve OEE.

Probably the biggest initiative over the past 5 or 6 years, and we have 2 or 3 more of these to go, is press rebuilds. We did get behind in our schedule of press rebuilds as we -- when we didn't have any capital to spend. And so we have been doing about one of those, one press rebuild a year in our OSB business. And which -- that increases productivity in general, and it increases quality and ultimately lowers the cost of those mills.

We also have plans for dryer improvements in the mills where we have gotten behind on dryer technology, which can improve wood yield. And then, specifically to our operation in Peace Valley, which is probably -- well, not probably, is our poorest-performing mill as far as operational efficiency, we are working there to both upgrade the team and provide the capital that's necessary to get that plant up to full operation.

So it's a little bit dependent on which mill we're talking about, but that's kind of just to give you an idea of the opportunities that are in front of us to upgrade technology and improve the cost position of those mills. And just let me kind of close this answer by saying all of that is put through a lens of return on capital.

Fortunately, those projects tend to be fairly high-returning projects, and so they're pretty easy to justify and approve. But we do want to make sure that we're investing capital wisely in a capital-intensive part of our business. But we do see opportunities to improve our cost position through the effective deployment of capital.

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John Plimpton Babcock, BofA Merrill Lynch, Research Division - Associate [26]

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And then just the last question before I turn it over. Just on the EWP business, I was just wondering if you could talk about the steps you've taken so far and ultimately what you have left to get that to where you want it to go.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [27]

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Okay. So about a year ago, maybe 5 quarters ago now, we took a step back from our EWP business. Look, no one more than us realizes how poor that's performed over the last decade. And we just wanted to take a fresh look at what's possible there.

The first thing we did was we cut 40-something positions out of that -- out of the division. Not all of those were filled, but a lot of them were. And so we did -- we pretty much did a consolidation around the operations and sales side of that business, kept a couple of marketing positions that we thought were unique to the business. We did take a hard look at cutting the SG&A and did so.

Secondly, we realized that the primary issue for that -- for the operational side of EWP, was asset utilization. So we've been really focused on growing both the LVL and the LSL part of the business, which tends to be the more capital-intensive part of the business. And fortunately, we've been able to do that while raising prices. And so by getting better utilization at our LVL plants and our LSL plants, we're lowering costs while we're increasing pricing, and that's been really good for margins.

Now look, our benchmark for that business is it needs to be -- sustainably earn the cost of capital. We're not quite there yet. We do see a path to that, to getting there, on -- but it's a topic of continual discussion within our company. And I do -- much like OSB, I do see opportunity in our EWP business to wisely invest some capital in very high-return projects that could help with our long-term margin situation in that business.

So I'm optimistic about the progress we've made and can continue to make. I mean, it does -- that product offering does complement what we do in OSB and Siding as far as our distribution and dealer strategy and even on to the builder and contractors. So it fits well in our market-facing portfolio, and we just need to make sure that we continue to improve the margins and the operating efficiency of that business so that we get the returns that we're looking for.

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Operator [28]

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

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Ketan Mamtora, BMO Capital Markets Equity Research - Analyst [29]

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First question, can you just remind us on SmartSide, on the pricing side, how much you have already implemented out of the announced price increases? What I'm really trying to get to is, is there kind of more coming in, in Q3 and Q4?

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [30]

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So Ketan, so what we've -- so far, we're -- we've pretty much -- we're at 4% over Q1, and we're at -- or Q2 of '17, we're at 4% year-to-date. And I think what we've said is it was going to be in that 4% to 6% range.

Pretty much anything other than where we are right now is going to be a mix standpoint. We've gotten the price increase we're going to get, and it would be mix from here on out unless we do something differently in the new year.

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Ketan Mamtora, BMO Capital Markets Equity Research - Analyst [31]

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Understood. That's helpful. And then, Brad, can you just remind us again on kind of updated thoughts around Cook and Val-d'Or? And kind of how much time it could take for you to get ready in those 2 mills? Because I understand, kind of, the positions are a little different.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [32]

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So 2 points there. Just to remind everyone, the decision process that we'll use will be somewhat dependent on mix. As we've said before, Val-d'Or would be a really good mill for our 16-foot products, like lap and trim, and Cook would be a little more favorable to our 8-foot products, our panel products.

So we're continuing to monitor growth by product category to understand which of the mills would be the most viable earlier. But that would only be one item of input, along with wood costs, logistics and the capital required to get the -- whichever decision we make up and running.

As we've looked at our growth for this year, especially with where we stand 6 months into the year, we do expect to begin the evaluation, seriously evaluating that next year.

I'll just remind you that our engineering group is pretty tied up right now on the Dawson conversion. But as we get through that in Q1 of next year, it will free up some engineering resources that we have that we will put full time on doing the analysis for the next siding mill. So I think we'll be in the position late next year to early part of 2020 of really talking more specifically about what we're thinking. But both mills remain viable options for future siding production.

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Ketan Mamtora, BMO Capital Markets Equity Research - Analyst [33]

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Got it. That's helpful. And just remind us of how much time would it take for Cook to get ready just in terms of getting the mill up? And how much would it be for -- time would it be for Val-d'Or to restart once you made the decision?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [34]

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Yes. I would say, for Val-d'Or, we would be talking about a year from the time we got Board approval for the capital. Since we would have -- just there is a physical infrastructure there. It would take quite a bit of work to convert it on the finishing side to siding. And we'd have to basically hire an entire plant's worth of people.

On the Cook, we would be looking more at 2 years, since that's basically a brownfield mill. We have some idle equipment around our system that we would move into Cook, so it wouldn't be completely a greenfield, but if you're thinking right now, a year away for Val-d'Or or 2 years for Cook from the time we announce, that would be about right. And that could bias us a little bit to Val-d'Or because we could be in the market earlier. So we'll just have to see how it plays out over the next 12 months or so.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [35]

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And Ketan, just remember, I know we've talked about it, but we would need to be running OSB for a period of time before we actually made siding. So although we wouldn't start it up for the OSB production, it would be for siding, but we may -- we would run OSB before we ran siding.

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Ketan Mamtora, BMO Capital Markets Equity Research - Analyst [36]

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And in rough terms, is kind of 6 months a good kind of ballpark just as a placeholder to think about it?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [37]

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For running OSB?

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Ketan Mamtora, BMO Capital Markets Equity Research - Analyst [38]

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Yes.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [39]

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Ketan, I would say at least. A minimum of 6 months, because we would want to make sure we got the quality systems lined out before we made that conversion over to running siding.

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Operator [40]

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Our next question comes from Chip Dillon of Vertical Research.

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Chip Dillon, Vertical Research Partners, LLC - Partner [41]

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First question is, just could you remind us quickly, when did or does Dawson shift from OSB to siding? And therefore, I would assume, if it's over there when you do the startup, that's where the startup costs would be incurred in the fourth and first quarter.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [42]

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Yes. I mean...

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Chip Dillon, Vertical Research Partners, LLC - Partner [43]

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So when -- has that been shifted over?

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [44]

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Yes. yes. I was just going to say, Chip. It's been in the Siding segment since 1/1 of 18. So -- and it would continue to be in the Siding segment in -- obviously, in Q4 and Q1 as we incur any startup costs.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [45]

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And just to give everyone -- Chip, I'll just give everyone an update on our current thinking on timing. So we're looking at taking the mill down in November, sometime in November. And so it'll run OSB through October, take it down sometime in November to start doing the downtime necessary for the conversion and then starting up sometime in Q1 on siding. And I should say early Q1 on siding.

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Chip Dillon, Vertical Research Partners, LLC - Partner [46]

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Okay. That's helpful. I mean, it's pretty clear you guys are pretty active in the market. Yet you are up to $1 billion in cash, and that could certainly build over time.

What is your thought about -- at least the part of that cash that you want to hold for the longer term, what are your thoughts about how to invest it? I know back when you were in big -- having big balances back right before the crisis, you bought some securities that didn't work out so great. And I just didn't know what your thoughts are this time. Is it just simply, like, treasury bills? Or would you maybe buy, like, 2-year notes? Are you buying commercial paper? How should we think about that?

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [47]

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Yes. Chip, obviously, I've been here and I still have probably some scars from that. And I would say that we are very conservatively invested in very short-term securities. I don't see us changing that. And I would say that it's just not -- I mean, anytime somebody tells you that you can get more return for the same amount of risk or less risk, there could be something there that doesn't make sense, and that's what we found out with the auction rate securities. So we will continue to invest the cash that we want to keep on our balance sheet conservatively.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [48]

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Chip, we did make a really, really good investment in Q2 of this year when we bought our own shares back.

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Chip Dillon, Vertical Research Partners, LLC - Partner [49]

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Yes. Well, it's interesting when you look at your net -- your value, it's -- we're constantly reminded that your company is worth less than the stock price because of that cash, so we happen to agree.

And then just on another point, could you talk a little bit about -- to the extent you can, about where you think we stand in terms of the capacity situation in North America from a standpoint of what you're feeling in your business? There were a lot of restarts. I know there's one new mill down in Texas. And it seems, at least to us, that we really haven't seen anything really announced in the better part of a year or more. So we're really wondering if most of -- or a large portion of what we could anticipate is already in the market.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [50]

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Definitely, Chip, it's in the market. I would say -- I mean, I'm just giving you my feel. Maybe we've absorbed half of the ultimate capacity -- of the new capacity that's coming on. We see more product from certain of the new mills than we do others, but it's still unlike maybe if you took all 5 of them, they're running about half of capacity.

So I think there will be more volume entering the market as those mills get lined out over the next 4 quarters. But I really think it was -- more to Gail's question, I don't really think that any of those one mills had a huge impact on pricing as much as the debottlenecking of the logistics in the first -- between Q1 and Q2 and a little softening demand in early in July.

So -- and look, I think it'll be choppy quarter-to-quarter as the capacity gets lined out -- or demand, we get demand swings or inventory shifts. But I don't believe, if we stay on this course of 1.3 million starts this year and another 5% to 10% growth in housing starts next year, I believe that those mills' capacity will be pretty easily absorbed.

Well, I was just saying, there will probably be some pricing swings across the way. But overall, I think the industry is in pretty good balance.

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Chip Dillon, Vertical Research Partners, LLC - Partner [51]

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And the last quick question, and maybe you just answered it. But with the pretty rapid decline in pricing, which isn't surprising given the seasonality, are we getting close to a point where you might rethink how you operate for the year? In other words, could there maybe be some, in certain markets, some downtime if we continue to see the price declines?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [52]

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Well, yes. I mentioned that in our comments. We are -- we will meet the demand requirements for our customers, and that's a huge priority for us and the ultimate priority, I would say. But at the end of the day, we are not going to run production that -- where there's not demand in the marketplace. And that means -- if that means adjusting our footprint regionally and the possibility of taking downtime, we will do that rather than run product to inventory or run product that's not sold.

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Operator [53]

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Our next question comes from Mark Weintraub of Buckingham Research.

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Mark Adam Weintraub, The Buckingham Research Group Incorporated - Research Analyst [54]

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First, just a couple of follow-ups, perhaps. You had referenced a little bit weaker demand in early July. Did that subsequently rebound?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [55]

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I would say, over the last week or so, we have seen stronger pulls in our order file.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [56]

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And Mark, the only thing I would add, I think, is the way we're thinking about it is that, with the way the holidays fell this year, being in the middle of the week, that kind of -- that's kind of different than it normally is, and when it -- and it kind of, people have a tendency to take a few more days off either on the front end or the back end. So it felt like we saw that.

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Mark Adam Weintraub, The Buckingham Research Group Incorporated - Research Analyst [57]

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And I guess one interpretation might have been, that might have sparked a little bit of destocking, possibly, by customers? And then maybe the demand strengthening, maybe that kind of you went through that process. And would that be a reasonable way to think about it?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [58]

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Mark, I think you are thinking about it reasonably. As prices start falling, the magnitude of the falls that we saw early in January, obviously, a purchaser is going to be hesitant to restock inventories in the face of those kind of pricing falls. And so the tendency is to wait, and from their perspective, find a bottom, which is understandable. And so at some point, though, there has to be a restocking. But I do think there was some hesitancy in the face of a hot July after the holidays, to take a big inventory restocking position, given the magnitude of the price falls each week.

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Mark Adam Weintraub, The Buckingham Research Group Incorporated - Research Analyst [59]

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And then -- and really just following up on Gail's question, where I think she'd asked whether or not you felt things had bottomed yet. I didn't know if you explicitly had answered that part of the question or felt you had visibility to answer that.

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [60]

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Okay. I'm not calling the bottom, to be clear about that. But we have seen strengthening in our order files beginning late last week. Now how that would run through reported pricing over the next couple of weeks, it's hard to guess. For me, anyway.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [61]

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And if you can't guess it, I'm stuck.

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Mark Adam Weintraub, The Buckingham Research Group Incorporated - Research Analyst [62]

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And then shifting gears, lastly, any update on the smooth SmartSide product?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [63]

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Smooth SmartSide product, hard to say, is in the second phase of product testing and really looking at weatherability as the key -- obviously, the component there, along with aesthetics. And so I'm not ready to call that commercialized yet, because we haven't done it. But we are making progress towards successfully having a smooth offering in our strand portfolio.

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Mark Adam Weintraub, The Buckingham Research Group Incorporated - Research Analyst [64]

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Any sense on timing of when you might be ready to call it?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [65]

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I would love to introduce it at the IBS, but we're not ready to call that yet.

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Mark Adam Weintraub, The Buckingham Research Group Incorporated - Research Analyst [66]

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Okay. And when's the IBS?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [67]

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In February.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [68]

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February this year -- next year.

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Mark Adam Weintraub, The Buckingham Research Group Incorporated - Research Analyst [69]

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Great. And then lastly, are you seeing any impact from the new Hardie capacity? And I realize it's pretty early for that, too, but anything in your markets related to that you're seeing?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [70]

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No.

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Operator [71]

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Our next question comes from Steve Chercover of D. A. Davidson.

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Steven Pierre Chercover, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [72]

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I also wanted to ask, along the lines of the thresholds of when you might take some downtime, not so much with respect to customer order files, but what is the threshold? Is it earning the cost of capital or just generating cash?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [73]

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Well, I mean, we're going to run if we can earn the cost of capital, that's for sure. But it really is more -- I don't really want to peg it on a pricing parameter, because when you have momentum, up or down, it's kind of hard to call that. For me, I don't feel comfortable calling that number. It really is our sense of demand capacity balance in the markets that we play in.

And when we said -- when we have customers that have strong pulls that need to take an inventory position, we're going to sell into that. We're not going to leave them hanging. And so I would -- I just want to characterize it as it's a demand capacity balancing decision rather than one that's just only pegged to pricing.

And I just -- and historically, Steve, I think the thing that's different about LP is before, we were more focused on maintaining a low cost position in all markets, which kind of tended to have us have a philosophy more of running than either selling -- either putting the product in inventory or try to sell it into the wholesale market, off the wholesale market or these third parties. We don't do -- that's what we don't want to do anymore. We want to make sure we're selling into a more of a balanced demand situation than creating an imbalance by us continuing to run when the market is soft.

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Steven Pierre Chercover, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [74]

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Okay. So it sounds like it's more nuanced, and it's really with a view to customer service and relationships than just the cost position?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [75]

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Yes. That's exactly right. We're more interested in keeping that balance, keeping our customers supplied. But what we don't want to do is push volume into the market that there's not demand for.

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Steven Pierre Chercover, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [76]

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Okay. And then switching gears, on South America, and it's terrific to see the new records being established, but it's still fairly small. I mean, my rough math says that the 3 mills do about the same revenue as a one large North American mill. So can you give us a sense of what the operating rates are there? And sort of -- I sound like a finance guy, but are you earning your cost of capital in South America?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [77]

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We are earning our cost of capital in South America. We have struggled in the past to earn the cost of capital in Brazil, but we have been focused on turning that around. And obviously, the market there, in Brazil, over the last 5 years has been horrible. But as far as the Chilean assets go, we've consistently earned the cost of capital there.

And the way I look at our LP South America operation, it is small today, no question about that, but we look at that continent, and currently, we're the only OSB manufacturer down there. We also make our siding product offering down there, and we see a lot of opportunity to grow. Now we've got to do that wisely, and obviously, the political winds change down there. But we see real opportunity to be a major player in the structural panel market in South America, and as are evidenced by our opening offices in Peru and Argentina. And I see real growth opportunity there.

And the pricing is somewhat insulated from the North America pricing environment. Now ultimately, the price swings here will play into South America over time as people look for outlets for production. But quarter-to-quarter, and sometimes even year-to-year, we can maintain more stability in pricing down there -- definitely maintain more stability in pricing down there than we'd see in North America.

So I think the investments we make down there are relatively safe. That's from a pricing volatility standpoint. We typically are moving assets out of North America down there, so it's pretty capital-efficient to make those investments down there. And as long as we have growth options in front of us for that business, it makes me excited about having it in our portfolio.

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Steven Pierre Chercover, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [78]

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No, I get it. I mean, it's not if you build, we will -- they will come, but I think it makes sense for the long haul. And then maybe one last one with respect to both your geographic mix and the value-add, which is less volatile than commodity. Is there any rule of thumb you can give us just on how we should kind of think of your overall mix with respect to the North Central benchmark?

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [79]

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Well, Steve, what I -- you mean -- I would say it, I mean, based on the geographic mills in terms of from a volume standpoint, if that's what you're talking about. I mean, in reality, the North Central region is less than 10% of our volume. So it's a small region. But when you look at the Southwest, we have 2 mills; the Southeast, we have 2 mills; Mid-Atlantic, one; Eastern Canada, one; and then in Western Canada, we have the big mill, being Peace Valley, and then Dawson is still running OSB. So we have 2 mills there. So geographically, from a volume standpoint, that's what you're going to get.

Now I think the way I would look at the -- when you look at the bigger mills, they're going to be more commodity than the smaller mills. So the bigger mills -- the Peace Valley, Maniwaki and Clarke County -- are more commodity-focused. That doesn't mean we aren't looking -- continuing to look at doing more value-add in those mills. But with that kind of volume, they do have more commodity. Is that what you were asking?

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Steven Pierre Chercover, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [80]

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Yes, I guess that helps. And we'll just kind of back-check it a bit, too.

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Operator [81]

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

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Paul C. Quinn, RBC Capital Markets, LLC, Research Division - Analyst [82]

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Just a couple of easy ones. One, Brad, I thought you did a good job explaining the price run-up and subsequent weakness. It seems like you've put a lot of focus on inventory levels and logistics and the resolution there of bringing prices down.

Where are your Western Canadian mill inventories in terms of OSB? And is there -- should we see further weakness as that volume hits the market? And then do you think your conversion at Dawson Creek and Weyerhaeuser Grayling press rebuild is good enough -- it will be enough to take the market?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [83]

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So the second question, I think, obviously, the downtime in October -- I'm sorry, in November and December and on into January should tighten the market, but it is in the middle of the winter. So I don't know how much of an impact that will have, depending on how we finish the year from a demand standpoint.

From an inventory level, I think, Mike? We're pretty much back to normal in our Western Canadian mills after the buildup in the first quarter. We've worked through the logistics challenges there. So just -- we do not have any excess inventory on the ground, abnormally, that we would have in a normal August.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [84]

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Yes. I think, Paul, that what happened there, when we talk inventories, for the most part, the mills may have been a little higher. But what happened across the industry is it was a lot either on the rails or in reloads. So the mill -- I mean, most mills aren't designed to handle more than a few days' worth of inventory. So it gets out of the mill or you've got to take downtime.

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Paul C. Quinn, RBC Capital Markets, LLC, Research Division - Analyst [85]

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No. Fair enough. And just on Dawson Creek, you mentioned startup early on siding in Q1 of '19. Can you remind me, is that a plan to run that mill only in siding, like you did for Swan? Or are we going to be toggling back and forth between OSB and siding?

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William Bradley Southern, Louisiana-Pacific Corporation - CEO & Director [86]

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Okay. So we are going to retain the capability to make OSB at Dawson. But Paul, our focus, especially early on, is we would prefer to run that plant full bore on siding for as long as we can.

Now let me tell you what will play into that, obviously, is the order file. But something that will be a little bit different than Swan, this -- and I've mentioned this before -- this plant will have a really good logistics efficiency for our West Coast customers. So we'll be looking at sourcing our West Coast customer base out of Dawson, where in Swan, we were basically railing product past Hayward to get it into the market.

So I could see -- I mean, the idea is to run it on siding, make the reallocation of customer demand so that we're able to run that plant full bore on siding for as long as we can. But just to remind you, we do want to retain the ability to swing it back to OSB if we need to, but that is not the plan.

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Michael E. Kinney, Louisiana-Pacific Corporation - Interim CFO & Treasurer [87]

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Haley, I think that's all the time we have for questions. So if you could please provide the replay number.

And thank you, everybody, for participating in our call. And as always, myself and Becky are here to answer any follow-up questions. Thank you, and have a good day.

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Operator [88]

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Ladies and gentlemen, this conference will be available for replay after 2:00 p.m. Eastern Standard Time today through August 14, 2:00 p.m. Eastern Standard Time. You may access the replay system at any time by dialing (855) 859-2056 and entering the access code 4199937. That does conclude our conference for today. Thank you for participating. You may now disconnect.