Hello. Thank you for standing by and welcome to the First Quarter of 2022 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 question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Aaron Howald, Vice President of Investor Relations and Business Development. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining LP Building Solutions today to discuss our results for the first quarter of 2022 and our updated outlook for the second quarter and the full year. My name is Aaron Howald and I'm LP's Vice President of Investor Relations and Business Development. I'm joined this morning by Brad Southern, LP's Chief Executive Officer, and Alan Haughie, LP's Chief Financial Officer. During this morning's conference call and webcast, we will refer to an accompanying presentation that is available on LP's IR webpage, which is www.investor.lpcorp.com. Our 8-K filing is also available there along with our earnings press release and other materials. We expect to file our 10-Q in a few days. Slides 2 and 3 of the earnings presentation provide notices and detail regarding non-GAAP financial metrics and forward-looking statements. The appendix of the presentation also contains some necessary reconciliations that are further supplemented by this morning's 8-K. Rather than reading those statements, I incorporate them by reference. And with that I'll turn the call over to Brad.

Thanks, Aaron. Good morning, everyone and welcome to LP's earnings call for the first quarter of 2022. The year is off to a very strong start for LP with record quarterly net sales of $1.34 billion and EBITDA of $636 million. LP's ongoing share repurchases have reduced the share count by now that the resulting quarterly adjusted diluted earnings per share of $5.08 was a record. I'll begin our segment review by recognizing and thanking our Siding Solutions business team for operating during Q1 with no recordable injuries. Financially, Siding Solutions set another quarterly sales record of $330 million in Q1. This represents a year-over-year revenue growth rate of 17% and is a combined effect of 12 percentage points of price including mix effect, which we will get to in a moment and 4% volume growth. Sales volume exceeded 420 million square feet with an average selling price of $784 per 1,000 square feet. Siding EBITDA margin was 25% in the quarter, despite raw material inflation, freight cost increases, and simultaneous capacity expansion projects. Accelerated growth in siding has been remarkable. So let me put these results in a long-term context. In Q1 of 2019, much earlier in LP's strategic transformation, SmartSide strand generated $187 million in net sales on 284 million feet of volume at an average sales price of $659 per thousand square feet. The past three years have seen compound annual growth rates of 14% for volume and 6% for price, resulting in 21% compound annual revenue growth. EBITDA for the Siding segment has doubled in three years, which is a CAGR of 25%. A significant component of this growth is a shift in product mix to higher value-added siding products. As you can see on slide 7 of the presentation, ExpertFinish, Smooth, Corners, Shakes, and BuilderSeries, all new since Q1 of 2019, accounted for 11% of total volume this past quarter and are the fastest-growing subset of the SmartSide product portfolio. This growth is driven by strong customer demand and new residential construction and especially with the addition of ExpertFinish, there is increasingly strong demand in repair and remodeling applications. To meet this demand, LP is making ongoing investments in capacity. I'm happy to announce that Houlton started SmartSide production in March on schedule and is shipping A-grade SmartSide as we speak. We are on schedule for a Q1 2023 start-up for our next mill conversion in Sagola, Michigan. There is a long runway of future capacity options after Sagola including conversions, expansions of existing facilities, and greenfield siding mills. We will share details about future capacity additions soon. We're also adding ExpertFinish capacity by expanding our existing facilities while building a new one in Bath, New York. The Bath facility is ideally located to receive Prime SmartSide from Houlton, finish it, and distribute it regionally to a market with huge potential for SmartSide. I will add that while this demand is gratifying, it is not surprising. We think that SmartSide is the best siding product available and a growing number of homeowners, builders, and contractors seem to agree. As we announced last year, SmartSide is also carbon negative and, in recognition of this, Green Builder Media recently named it the most sustainable product in the siding category. The OSB segment driving growth in the value-added Structural Solutions portfolio supports LP's ambition to be recognized as a leading producer of specialty building products. Structural Solutions volume exceeded 500 million feet in Q1, an all-time record. Structural Solutions accounted for 55% of total OSB volume, which is eight percentage points higher than last year. The OSB segment released two new specialty products in the first quarter, both of which will contribute to the Structural Solutions mix. The first is Legacy Premium Sub-Floor Adhesive, which is designed to contribute to installation efficiency and improve the quality and durability of flooring systems. The second is NovaCore Insulated Sheathing, which combines the structural integrity of OSB sheathing with thermal and acoustic insulation by adding a layer of expanded polystyrene insulation. NovaCore can be used as a direct substitute for sheathing with standard self-spacing and other framing processes. OSB prices climbed sharply through Q1 and in the quarter were nearly double the level at year-end. This produced just over $500 million in EBITDA, second only to Q2 of last year and better than most prior full-year results for the OSB segment. Obviously, this generated extraordinary cash flow, which LP will continue to return to shareholders. I want to congratulate Jimmy Mason, who has been named Executive Vice President and General Manager of the OSB business after several years as the Vice President of Siding Manufacturing. I am confident that Jimmy will excel in this role as he has so consistently done in the past. I am very proud that LP's bench strength allows us to promote internally to fill such a critical leadership position. Engineered Wood in South America also had strong quarters. EWP generated $170 million of revenue and $38 million in EBITDA on strong demand for I-Joist and Laminated Veneer Lumber. South America delivered $67 million in sales and $25 million in EBITDA. It should come as no surprise that LP continues to face headwinds from raw material cost inflation, as well as logistics challenges with Box Car and truck availability in Canada being the most acute gaps. For freight, availability is a key issue with cost secondary. We are working with customers and logistics providers to get through this, but we expect these challenges to persist for some time. So far, freight availability has had limited impact on siding; logistics challenges have forced some detrimented downtime at our Canadian OSB mills. Alan will provide more detail on these cost pressures and their impacts. And with that, I will turn the call over to Alan for a more detailed review of LP's financial results and an update on our capital allocation strategy before we take your questions.

Thanks, Brad, and thank you all for joining us this morning. As Brad said, the first quarter was exceptionally strong. The story fundamentally is that the things LP can drive and control, namely 17% siding growth and 55% structural solutions mix more than offset the negative impacts of raw material and freight inflation. And the OSB price climb during the quarter generated significant cash, which we continue to return to shareholders. But before discussing the Siding and OSB segments in more detail, I'll give a brief overview of total company performance. Despite my love for round numbers, I must point out that the $1.3 billion of revenue is actually $11 million higher than the same $1.3 billion we reported in the second quarter of last year, making this technically a record quarter for sales. EBITDA of $636 million was an increase of $174 million over last year, of which $130 million was the result of higher OSB prices. We generated operating cash flow of $425 million and spent $92 million of it on CapEx. Less obvious is that our record adjusted earnings per share of $5.08 would have been nearly $1 lower, but for LP's significant share repurchases, which have reduced the share count by more than 20% over the last 12 months. The waterfall on Page 8 details the quarter for Siding. The selling price increase of 12% added $30 million in both revenue and EBITDA. Volume increased by 4% to 421 million square feet. Given that we were already operating basically at full capacity this time last year, this record performance was only made possible by impressive system-wide operations including logistics. Naturally, having just started up Houlton, shipped minimal volume in the first quarter, but it did start on time and is ramping up quickly. Investments in growth of $12 million include $9 million of Houlton and $3 million of increased selling and marketing spend. The rising costs of crude oil and derivative chemicals drove up the price of resins and overlays, as well as the cost of transporting logs to the mills. The resulting $26 million of inflationary costs was, however, more than offset by the aforementioned price increases. The resulting EBITDA of $83 million at a margin of 25% is remarkable given the combined impacts of inflation and the simultaneous expansion projects at Houlton and Sagola. This demonstrates that even in periods of significant investments in growth, high inflation, and a mill start-up, the Siding segment can deliver both long-term growth and long-term margin expansion. The OSB waterfall on Page 9 shows a $205 million year-over-year increase in revenue; about two-thirds of this came from higher OSB prices. The bulk of the remainder was driven by the combined impact of higher volume from increased capacity at Peace Valley and an eight-point increase in Structural Solutions mix. And despite the restart of Peace Valley, the volume of commodity OSB sold in the quarter fell by 4%, as Structural Solutions volume grew by over 30% to reach 55% of total OSB volume. This shift to Structural Solutions, consistent with LP's strategic transformation, delivered $78 million of revenue and $47 million of EBITDA. As in the Siding business, raw material inflation presented a $21 million headwind in the quarter. However, while Siding has sold at delivered prices, OSB freight is largely passed on to customers, meaning that increases in freight costs have minimal impact on OSB segment EBITDA. So, another incredible quarter of cash generation in the OSB business, the bulk of which we are in the process of returning to shareholders. Page 10 summarizes the quarter for LP as a whole. I've already mentioned the $130 million of OSB price impact in North America; a similar dynamic added $20 million in sales and EBITDA in South America. But I want to direct your attention to the middle section, which aggregates the impacts of LP's controllable strategic efforts and the less controllable inflationary impacts. Siding growth of $47 million, Structural Solutions growth of $78 million, offset by a decrease in commodity OSB volume of $12 million, resulted in a net revenue increase of $113 million. That is $47 million, plus $78 million, minus $12 million. The corresponding EBITDA impact was $76 million. That is $34 million plus $50 million minus $8 million. This $76 million not only offsets, but it's nearly double the negative impact of inflation in North America of $44 million. Now we can't control or predict future costs and we do expect continued headwinds for some time. But the best defenses are good offense, as the saying goes. And in LP's case that offense is a relentless drive towards specialty products, which is, of course, the core of LP's transformation strategy. Page 11 summarizes cash flow. We started the quarter with $371 million in cash. The $636 million generated by EBITDA was partly offset by a $180 million increase in working capital, the largest component of which at $127 million is the effect of rising prices on accounts receivable balances. The normal effect of seasonal log inventory increase and an inevitable inflationary increase in the unit value of inventory accounts for the remainder. After minimal other stuff, LP generated $425 million of operating cash flow. We spent $92 million in the quarter on maintenance and growth capital and returned $123 million to shareholders. The $59 million in business divestitures is the proceeds from the sale of our 50% state in the I-Joist joint venture with Resolute Forest Products. As a side note, the associated $39 million gain has, of course, been excluded from both adjusted EBITDA and adjusted net income. The net result of all this is a $266 million increase in cash, raising it to $637 million at quarter-end, which brings me to capital allocation. The $104 million spent on share repurchases lowered our share count from 86 million to 84.5 million shares. As of Monday morning, we spent a further $182 million to repurchase 2.9 million more shares, bringing our share count as of yesterday morning to 81.6 million. This leaves $214 million remaining under the preexisting $500 million authorization. And we continue to believe that LP shares remain significantly undervalued. Accordingly, LP's Board of Directors has approved a further $600 million for share repurchases, bringing our total authorization as of yesterday morning to $814 million, which brings me to Page 12 and LP's updated second quarter and full-year guidance. CapEx for 2022 will be in the $400 million to $430 million range. Given this remarkable first quarter and the ongoing ramp-up of Houlton, we are raising both our second quarter and full year siding revenue guidance to year-over-year growth of at least 20%. As for OSB, without providing a price prediction, we will offer guidance predicated on a price scenario. Should random length prices remain unchanged from last Friday's levels and assuming no significant worsening of logistics availability, the OSB segment would generate about 7% less revenue in the second quarter than it did in the first quarter. Now, both Siding and OSB continue to invest in growth, including projects in the second quarter to add premium flooring capability to Peace Valley and improve the reliability of Clarke County emissions control technology. And of course, both businesses continue to face headwinds from raw material and freight cost inflation. On that basis, and assuming no sudden reversals in demand or dramatic increases in costs, LP's consolidated EBITDA for the second quarter of 2022 should be at least $540 million. And with that, we'll be happy to take any questions.

Thank you. Our first question comes from John Babcock with Bank of America. You may proceed with your question.

Thanks. Good morning and thanks for taking my questions. I guess turning out, it would be great if you could just talk about the housing repair and remodeling markets and what you're seeing there. And then also, on that point, are you seeing any indications of a slowing in demand with rising rates, higher home prices and some of the other factors that exist out there in the marketplace?

Good question, John. For all three North American businesses, we are not experiencing any slowdown in order activity. Order files remain strong across the board. Specifically, inventories are still lean among the various distributor types we work with. There was a slight buildup in Pro Retail and OSB as prices decreased, but overall, we're still managing inventories carefully. The outlook from our builder partners continues to be very positive, and our distributor and Pro Retail partners share a similar perspective. While there are challenges in the housing market due to mortgage rates and affordability issues, these factors are not currently affecting our order files or our short-term outlook.

Got you. Thanks for that. And then just on the Siding growth outlook, you raised obviously from greater than 15% to greater than 20%. You might have touched on this and maybe I missed it, but can you just talk about what's driving that increase? And then also, how does that new growth outlook impact your plans for the next Siding project if at all?

I’ll start with the last part of your question. The plans for the next siding project in Sagola are not affected because we anticipated this situation early on. Additionally, we are fully engaged in planning the project after Sagola and the one following that. We are actively working on mill conversions as quickly as possible and ordering parts due to the growth we're experiencing. From an outlook perspective, it's encouraging to see a strong start-up in Houlton, which will provide us with additional capacity to sell right now and an increasing volume as we gain confidence in achieving A-grade production throughout the year. Sagola is a significant mill for our system, expected to launch in Q1, and we foresee positive volume growth next year linked to that conversion. We continue to manage order files in our Siding business, which we've been on for over a year, and I anticipate we'll remain on that managed order file for the rest of this year. As we transition to Sagola production next year, we hope to align our capacity better with demand, allowing our distributors to build up some essential inventory. Overall, the growth has been impressively strong and resilient over the past four quarters.

Okay. And then just last question before I turn it over. Just on South America could you just talk about how market conditions feel down there relative to a quarter ago?

Yes. The market has remained strong. While LP South America pricing is not directly correlated with North America, there obviously is an impact as imported volume to South America moves in and out of the market. So we've seen good demand down there, and pricing has been more resilient than we planned for, fortunately. So that resulted in a really good quarter. We are putting some capital into Chile to grow our capacity there with the full expectation that we'll be continuing to grow that volume over the next couple of years. So, despite all the political turmoil down there across South America, the OSB market has been really resilient.

Okay. Great. Thanks for all the questions and all the answers. Appreciate it.

Our next question comes from Ketan Mamtora with BMO Capital Markets. You may proceed with your question.

Thank you and congratulations on a strong quarter. I wanted to touch on the strong growth in innovative products within the Siding business. Brad, how do you see innovative products as a percentage of your total Siding portfolio looking ahead to the next couple of years from the current 11%?

Yes. Look, Ketan, obviously a key to our continued growth is our ability to innovate around new products. We see tremendous upside with our ExpertFinish portfolio of products. Obviously, the market is moving that way. And as we build capacity and have more substrate to sell, we'll be focused on ExpertFinish as a growth platform for us. The other key driver for future growth is our BuilderSeries. That's a product that's been tailored for installation with large builders, national and regional builders, and does come with a price point that can be attractive there. Those two will kind of be the workhorse innovative products that can drive incremental volume for us. But then we have a myriad of other ancillary products included in trim pieces, the whole smooth product offering that is also, maybe not having as much volume, but are certainly key to us being able to be a preferred sub-siding supplier into our contractor and distributor base. So, it's a really important part of what we're doing. As you mentioned, we're at 11% right now as far as the innovative mix, and we see that going into 20% to 30% as we continue to innovate and we continue to find success with these high-potential growth platforms like BuilderSeries and ExpertFinish.

Okay. As a follow-up, with siding demand remaining strong and your efforts to plan for post-Sagola capacity, can you provide any updates regarding the capacity options you've previously outlined, especially considering the current strong demand?

No, Ketan, there's not. I mean, we continue to work on it since we've talked about it on the last call. As I've mentioned before, and I won't be repetitive unless I get a specific question around that, but we've got a myriad of options. Each of those options has different pros and cons, let's say, as far as capital intensity, regional location, and ability of a particular press to make a certain product offering. And so, we're continuing to do engineering; we're continuing to secure long lead time items, but we don't have to make that decision today. And because, as we see our customer base shift or our product preferences shift, we want to wait a little bit just to make sure that that next decision fits the current situation of the business. So, we've got tons of options. We're working on it but there's not a reason to make a decision today. So, we want to continue to study the order file and order patterns before we make that call.

Got it. I’ll jump back into the queue. Good luck for the rest of the year.

Thank you, Ketan.

Thank you. Our next question comes from Susan Maklari with Goldman Sachs. You may proceed with your question.

Thank you. Good morning, everyone. My first question is on the Siding side thinking about the volumes there as we ramp. Can you just talk about how you're thinking of the cadence of growth, especially as we think about some of the comps that you face over the upcoming quarters relative to the incremental ramp that will come through as this new facility fully comes online?

Yes, Susan. Good morning. So the capacity of that line for Siding is about 220 million square feet. We plan and expect to be running at that rate by the end of the year. So, there's a ramp-up curve that goes from basically zero in February to full capacity in December, pretty linear in that ramp-up. And then, we would be at full capacity obviously for all of next year. So, that's how we're thinking about it. We're certainly planning on having and selling that volume; it's much needed. So, I hope you find that answer helpful.

Yes. No, that's definitely helpful. That's good. Thank you. And then, my next question is, when we do a lot of our channel checks around the homebuilders, especially as it relates to EWP and even for OSB, it sounds like inventories are exceptionally lean on the ground. You've got a lot of producers, especially on the EWP side, that I think are still on allocation there. So, as you think about some of those bottlenecks that you're continuing to face on the transportation side, as those do potentially start to ease as we get into the spring and the summer and some of that volume starts to come through, how do we think about those different kinds of pushes and pulls as it relates to the supply and demand dynamics and what that might mean for pricing as we look to the back half of this year?

Hey, Susan, I'll tell you, I'm not going to give a specific price outlook, but just let me speak to the product flow, as I think the nature of your question. I believe – look, the OSB market and the EWP market are big markets, as you know, builders are very busy, very active, have a nice backlog for the rest of the year. And as the logistics challenges free up, if they do, as we move through the year, and they will, channel inventory is so lean, but I think a good bit of production could just go into the restocking distribution and look, even the warehouses at our mills to get to some kind of normal service level before demand capacity would be out of kilter. And then, any kind of growth in housing, if other supply chain bottlenecks free up in the second half of the year, so the builders can even build at a higher pace. That would be even more of a pull on OSB and EWP volume. So, I really expect the market to remain from a capacity demand standpoint tight for the rest of the year. When we get to winter, typically that has been a period of time where we see some inventory restocking happening, particularly on the OSB side. Some of that is dependent on building slowing during that part of the year. I just really struggled to see us getting too much of an imbalanced situation until we get to November. That's just my personal outlook on the capacity demand ratio right now in the industry.

Yes. No, I appreciate that color. That’s very helpful. Thank you and good luck with everything.

Thank you, Susan.

Thank you. Our next question comes from Mark Weintraub with Seaport Research. You may proceed with your question.

Sure. Thank you. Congrats on another phenomenal quarter. I have a couple of mixed questions too. On the OSB side, that's a big move towards Structural Solutions. Can you share with us, what impact does that have on the business financially? Does it reduce volatility, or does it increase margins, or what type of color as you're increasing that percentage of the business to structural solutions can we see over time?

Two things. You mentioned both improved market conditions and resilient margins. One of the goals of our Structural Solutions initiative is to focus on products that offer a more sustainable incremental margin. In a down OSB market, our structural solutions portfolio allows for some margin resiliency. While this can reduce volatility to some extent, we currently don't have enough of our structural solutions that are significantly disconnected from the base pricing of random lengths of commodity to impact that volatility as much as we would like. Thus, it's more about creating resilient margins rather than addressing pricing volatility. For instance, with products like FlameBlock, we base pricing on a price list. Some of the innovative products in our pipeline, like NovaCore, we aim to disconnect from random pricing. However, for our major flooring SKUs and TechShield, it is challenging to achieve that disconnection.

Thank you. Engineered wood products saw a significant increase in earnings. Do you have any updates regarding the potential sale of the business or any changes in your thought process?

No change in thought process. We are running a process and we are making progress on that process as we speak. So more to come on that, Mark.

Okay. Great. I'll ask one more question and then I'll return to the queue. You mentioned that SmartSide is carbon negative. Can you clarify how it compares to other siding products? Additionally, is the OSB product also carbon-negative?

Yes. So Mark, we have a really good carbon story and it's more than a story, it's a reality when it comes to capturing carbon and nailing it up on the wall for a long time. In the case of Siding, we have a five-year guarantee. In the case of OSB, it's there as long as the home is there. And so – and being in this composite wood business, we are a carbon capture business. And we are very – from a carbon standpoint, our manufacturing process is rather friendly to that because we used almost all the material, 98-plus percent of the material that comes into the facility in the form of wood. And obviously that is remarkably better than PVC siding or fiber cement. So, from a carbon-friendly standpoint, like most of our competitors in the wood products business, we've got a really good story to tell there. And we think ultimately that will provide us a good competitive advantage as well.

Super. Appreciate it.

Thank you. Your next question comes from Sean Steuart with TD Securities. You may proceed with your question.

Thanks. Good morning, everyone. A couple of questions. With respect to input cost inflation, you gave us general trends for OSB and Siding for overall year-over-year inflation. Can you give us a bit more granularity on how much of it was resin versus wood? And on resin specifically, are there any issues securing supply right now? We're hearing that for other chemical inputs across the industry. I haven't heard anything with respect to resin but is security of supply a concern at all?

I'll start with the security of supply. Things are tight. I would say as we crossed into this quarter, we have not had any supply input challenges that we could manage through. So we feel like availability is good right now; of course, better than it's been in a while. Obviously, a hurricane in the Gulf can change that pretty quickly, but we haven't really had any supply chain issues as far as securing the material that we need. From an inflationary standpoint, most of that inflation has happened with resin because it's an oil derivative and most of those materials that we see big increases in, that we've reported is due to the relationship to hold the derivative and not driving that mostly through index pricing. So – on the wood side, we haven't seen significant stumpage price increases in North America. But obviously, to get the material into the facility, the haul distances, the fact that it's on truck, or primarily on trucks, some rail, diesel fuel pricing has impacted that. But – and Alan, I don't know if you want to add some more color to that.

Yeah. I mean, the primary source of the raw material increase is anything that is fundamentally oil-based. So our PMDI resin costs are up 55% or so. Wax that we use in Siding is up 30%-odd. So it's almost anything that is fundamentally oil-based is driving up the cost. There are some modest increases in the cost of fiber. But really, the majority of it is oil-based, and it impacts as I said both the overlays, the papers, the waxes, and the resins fundamentally oil.

That's useful detail. Thanks very much. Second question, I just wanted to follow up on the Structural Solutions element of the OSB business. You touched on the margin economics. I'm just trying to get a sense that the 55% of the mix that you reached in Q1, is there a target or ceiling for that or the objective for that ratio? And how fast do you anticipate getting there? If you could remind us of those dynamics?

Sure, Sean. In 2017, we set a target of 50% as part of our strategic plan. In November, we revised that with our Board to 75% of Structural Solutions. That's a three-year target from last year setting it with our Board. So we're full steam ahead on getting to 75%. And then when we get to 75%, we'll raise it again. It would be – I mean, it would be awesome for LP to be in a position where we're only running commodity OSB as basically between order changes at our facilities. We're way out from that, but that certainly is what we're focused on achieving ultimately. We want to add back – I mean, OSB is a great substrate. Obviously, we all know very vulnerable to commodity price swings. But it's a good substrate to build value off. As I've mentioned before on this call, when you add an overlay or sanded or beef up the resin in the case of flooring, you can get value there. So we're really looking on the incremental margin as a value enhancer for our business.

That's great details. Thanks very much, Brad. That's all I have.

Thank you. Our next question comes from Paul Quinn with RBC Capital Markets. You may proceed with your question.

Yeah. Thanks so much. Good morning, guys. I just want to start with Siding, just that Siding 17% growth is pretty impressive given the managed order file. Just wondering where you're seeing that growth on a regional basis? Which areas are sort of growing fastest and which areas are growing a little bit slower?

Off the board, Paul, except for one exception, we've seen really good growth year-over-year. So it's not – there's not a regional component that's any significantly stronger than another. And for most of the channels, it's pretty evenly distributed. We did see a softening off of the super-good volumes last year in our consumer retail – no concerns there. It's just that we had such tough comps compared to Q1 of last year. But the strength is across the order file, both geographically and channel-wise or segment-wise. Q1 is a good inventory build for shed, and we saw that. So it's been really across the board. If we had more volume to sell, with this allocation issue, I think it could be even stronger. Maybe we don't have enough volume to see what the different strengths and weaknesses are. It's just that across the board, our customers are taking all that we can allocate to them.

It sounds like the SmartSide initiative is progressing well, and with the capacity of 220 million square feet, you anticipate producing around 100 million square feet this year. Does that alone account for the 20% growth in Siding for 2022, or does it also include operating your existing mills?

There are two things. Certainly the Houlton volume helps, and you're ballpark right on your estimate for what the volume will be this year. But we've done a really good job too, Paul, of getting all we can out of our system. That's come from—because we're on allocation, we can be a little more run optimal as far as the SKUs and the way we operate the facilities, the way we match what we produce to our ability to ship, truck, and rail to certain regions. And so we're optimizing our mill system to try to get just as much volume out incrementally as we can, even though we're kind of—I'm running at capacity. I mean, everything we have is running 24/7, except for scheduled maintenance or capital downtime. But our Siding Solutions team is doing a really good job finding ways to get incremental volume out of the system through optimizing the order flow through the facilities. That's where we're seeing volume growth, other than, of course, what we want to get out of Houlton.

Okay. So obviously this growth in Siding is going extremely well. What competition areas are you running into in terms of other substrates? Is it vinyl in some markets? Is it fiber cement? Where is the competition for you?

Yeah. Both of those, I mean, looking in shed. And in DIY , wood shed plywood T1-11. We compete against every day, particularly in shed as I mentioned. And then, from a lab siding standpoint, its vinyl and fiber cement. And then on from trim, it's primarily actually a SolidStart, some PVC, some fiber cement but SolidStart a big part of the market that we compete against. So it depends a little bit on the product. But yeah, it's plywood for the panels and then fiber cement and PVC for the trim.

Okay. And then just last question just on Sagola, what's the capacity of that? Can you remind us again?

Paul, this is Aaron. It's about 420 for OSB. And as a siding, it will be in the neighborhood of 300 to 320.

That it would be good to have that one online.

Definitely, wish you had it right now.

Thank you. Our next question comes from Ketan Mamtora with BMO Capital Markets. You may proceed with your question.

Thank you. But can you give us a quick update on how Entekra is performing?

Yes. So Entekra, we continue to see good order intake for the facility. We are making progress operationally in the facility as well, though it's not where we want it to be. So, I think the progress is slower. If there's progress being made, it is slower than we would like to see. We're learning as we go, particularly – I mean I'm kind of back to Paul's question on Siding, the mix we run through that facility has a significant impact on efficiency and cost. And so we're learning how to match that plant's capability to the reality of the market in the Northern California area. So, I would say it's okay, Ketan, but it's slow progress towards a business that we would be ready to plow more capital into in order to grow it. We still got some more improvement on the operations side.

Got it. Is there a way to kind of have some numbers around what the revenues look like at this point, Brad?

We are looking at approximately $93 million for the past 12 months. This figure is indeed $93 million, and we are currently experiencing some losses in this area.

Understood. That’s helpful color. I'll turn it over. Good luck.

Thank you. Our next question comes from Mark Weintraub with Seaport Research. You may proceed with your question.

Thanks. Three quick follow-ups. So, just on Entekra, are we still expecting green light/red light sometime this year or not necessarily?

No, we would — we are really focused on understanding our position in that business this year, Mark, and making a call on green light, red light, yellow light. That's totally focused on that.

Okay. And second on Sagola, should we use a similar type of linear and expect order of magnitude 150 million square feet? I realize it may start up a little bit later in the calendar about 150 million square feet for next year, or what would be a good ballpark?

Yes, I'd say that's a good ballpark assumption for now. And as we get to the next quarter or two, Mark, if we need to refine that we will. But yes, I would agree that's a good number.

Super. And then lastly, Alan, I believe last quarter you talked about Siding generally kind of maybe 25% EBITDA margins this year. You obviously came through that in the first quarter despite some of the headwinds. Is that still a good number to use or might there be reasons for it to be better or worse?

At the moment, I would say there's definitely a tailwind behind that long-term margin guidance, but I think that's the most that I'm going to say at the moment.

Okay. Maybe I misunderstood what you mentioned last quarter about the direction for 2022 to 25%. Did I misinterpret?

No, it's still not unreasonable. Although I may have answered in the long term. At the moment, those aren't dissimilar.

Thank you. Our next question comes from John Babcock, Bank of America. You may proceed with your question.

Hey. So, I just want to quickly touch on the Structural Solutions mix again. There was a pretty big jump just from last quarter alone. And I was just wondering, so how much of this was driven by just the sheer lack of availability of other products? I was wondering if that might have contributed to the mix this quarter or if there are any other factors at play here. Also, I just wanted to generally get a sense for how we might think about this mix as the quarters go on. I would assume we might see some pullback from that 55% range, but I want to get your thoughts.

Yeah. Good question. So look at several factors that helped. One is in these tight availability markets, we have the ability to push Structural Solutions into the market; people are willing to take what they could get. We did restructure our contracts or modify our contract volume for this year, again to emphasize the structural solution product offering. And then also let's not forget that Peace Valley does have a really good capability around TechShield, and that's a good product for the West Coast. So as we ramped into the Peace Valley ramp-up curve, we're able to ship back into some markets on the West Coast where we have been strong in TechShield in the past. Now, look, Peace Valley still makes a lot of commodity. So – but certainly from an overall volume standpoint for structural solutions, that didn't hurt. But it's really, it's our strategy. Our product offering is extremely strong, but it is valid to assume that in a tight market, we have some ability to distress the structural solutions portfolio and get that into the market maybe a little more easily than we can in a down market.

I might add that as Brad said, the size of the increase year-over-year obviously is coming on the back of last year's resin problems. But we shipped over 500 million square feet in Q1; that is a record in an absolute sense.

Yeah. Understood. Okay. That’s all I have. Thanks.

Well, seeing no further questions, we'll draw the call to a close there. Thank you everyone for joining us. This will conclude the first quarter earnings call for Louisiana-Pacific and we'll look forward to speaking with you again soon. Thank you, operator.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.