Louisiana-Pacific Corporation

Multiple growth levers; time to get on(side) this

structural growth story

EQUITY RESEARCH | SEPTEMBER 8, 2021

For Required Non-U.S. Analyst and Conflicts Disclosures, please see page 32.
 RBC Dominion Securities Inc.
EQUITY RESEARCH
Paul C. Quinn (Analyst)
(604) 257-7048, paul.c.quinn@rbccm.com
Marcus Campeau, CFA (Senior Associate)
(604) 257-7657, marcus.campeau@rbccm.com

September 8, 2021 Outperform

Louisiana-Pacific Corporation NYSE: LPX; USD 63.28
Price Target USD 100.00
RBC Fusion™: Multiple growth levers; time to get WHAT'S INSIDE
on(side) this structural growth story ☐ Rating/Risk Change ☐ Price Target Change
Our view: Why is this an RBC Fusion report? Louisiana-Pacific (“LP”) is ☑ In-Depth Report ☐ Est. Change
a high-conviction investment idea for us given the growth and attractive
☐ Preview ☐ News Analysis
valuation. We believe that the Street is missing the positive impact
of SmartSide production growth and increased pre-finishing penetration Scenario Analysis*
over the next 5–10 years. We think investors under-appreciate the Downside Current Price Upside
ongoing transition, with the shares likely to re-rate higher as the business Scenario Price Target Scenario
shifts toward high-growth segments and away from commodity markets. 30.00 63.28 100.00 125.00
Therefore, we reiterate our Outperform rating and $100 price target. LP 51% 59% 99%
was added to RBC’s “Top 30 Global Ideas for 2021” in July 2021. *Implied Total Returns

Key points: Key Statistics

We think LPX can compound at a double-digit rate over the next decade Shares O/S (MM): 94.7 Market Cap (MM): 5,993
Dividend: 0.72 Yield: 1.1%
– While investors have historically traded LP as a commodity wood product Debt to Cap: 0% Enterprise Val. (MM): 5,909
producer, we think that the company’s growing siding business has a long Avg. Daily Volume: 1,462,029
runway for growth over the next decade. Even assuming that OSB will
RBC Estimates
produce results in line with historical average going forward, we see a path FY Dec 2020A 2021E 2022E 2023E
to >$240 per share driven by siding capacity additions, the rollout of the EPS, Adj Diluted 4.31 13.38 9.34 5.20
pre-finished siding strategy, and a re-rating of the siding business to levels P/AEPS 14.7x 4.7x 6.8x 12.2x
more in line with high-growth branded building solutions peers. EBITDA 781.0 1,919.0 1,308.0 799.0
Lever 1: Capacity – We expect LP to continue adding capacity in its EPS, Adj Diluted Q1 Q2 Q3 Q4
Siding business over the next decade, with conversions at Houlton and 2020 0.34A 0.43A 1.56A 2.01A
Sagola already in the works. Thereafter, the company could add capacity 2021 3.01A 4.74A 4.00E 1.64E
2022 2.91E 3.56E 1.99E 0.88E
at Maniwaki, Val-d’Or, Peace Valley, and Cook. We view these capacity
EBITDA
additions as high-return projects that would create shareholder value. 2020 83.0A 97.0A 273.0A 328.0A
Lever 2: Pre-Finishing – Still in the early stages, LP plans to increase 2021 447.0A 684.0A 542.0E 245.0E
the amount of pre-finished siding sold from ~2% in 2020 to ~30% long- 2022 398.0E 478.0E 285.0E 147.0E
All values in USD unless otherwise noted.
term. Although the capital cost is minimal (~$80 million), the benefits Priced as of prior trading day's market close, EST (unless otherwise noted).

are significant given that pre-finished siding sells at a ~75% premium but
costs only ~30% more to produce. Pre-finished siding could also help LP to
increase market share in the repair & remodel market. We see LP building
a network of pre-finished siding locations over the next decade.
Lever 3: Re-Rating – We believe that LP shares are fundamentally mis-
priced by the market, with investors continuing to view LP primarily as a
wood product producer despite the ongoing shift at the company. Longer-
term, we see ~75% of normalized revenue coming from the Siding segment,
which should be enough to shift the narrative. For context, LP’s closest
peer in the siding business, James Hardie, trades at 17.2x consensus 2022E
EBITDA, whereas LP is trading at 4.6x our 2022 EBITDA forecast. Even after
normalizing for LP’s commodity exposure, its Siding business is trading at
an implied ~8.5x multiple.
There’s still upside from non-siding businesses – As seen over the last
year, the OSB business has the potential to produce windfall profits, and
we expect market conditions to remain tight going forward. In South
America, LP has built a relatively stable and growing business that is likely
to experience further growth. Finally, LP’s investment in Entekra is still in
the early stages but could have further upside.

Disseminated: Sep 8, 2021 02:06EDT; Produced: Sep 8, 2021 02:06EDT

For Required Non-U.S. Analyst and Conflicts Disclosures, see page 32
Executive Summary
Capacity Pre-Finishing Re-Rating

We see significant potential upside in LP shares

We believe that Louisiana-Pacific remains significantly undervalued by investors given: 1) the potential for continued volume growth with new siding mills; 2) the margin uplift
from the transition to pre-finished siding; and 3) the eventual market recognition of the superior siding business as reflected by an increased EBITDA multiple.
Following the execution of the company’s strategy and a re-rating to a modest discount vs. James Hardie, we think the siding business alone could be worth ~$17 billion. This
dwarfs what will become a much smaller commodity OSB business as more mills are converted to SmartSide. We think that LP’s OSB business would be very attractive to
potential strategic acquirers and could garner a premium vs. our forecast in a strong market.
We value the South American and Entekra businesses based on their current potential; however, we think both could have far greater upside if LP is able to successfully
execute growth plans. We value the EWP business based on mid-cycle earnings but note that current earnings are well above mid-cycle due to strong market conditions.

How we think the business could be valued in 2030

$MM, unless otherwise noted 2030E 2030E EBITDA 2030E Valuation
Segment Revenue EBITDA Multiple Total Per share % of Total Comments
Siding $3,128 $1,150 15.0x $17,250 $182 75% Addition of 6 new mills and ExpertFinish
OSB $691 $175 5.5x $965 $10 4% 3 mills converted to SmartSide
EWP $405 $35 5.5x $195 $2 1% Market normalization
South America $252 $80 6.0x $480 $5 2% Higher multiple reflects growth opportunities
Other $100 $10 5.0x $50 $1 0% Entekra at approx. cost
Corporate $0 -$45 13.1x -$590 -$6 -3% Increased corporate costs due to increased size
Enterprise Value $4,576 $1,405 13.1x $18,350 $194 80%
Add: Net cash (Q4/30) $4,532 $48 20% Includes siding growth capex
Market Value $22,882 $242 100%

+59% +11%
implied return implied CAGR
Current share price One-year price target Est. 2030 share price
$63.28/share $100/share $242/share

+15%
implied CAGR
Click here for our
model summary
Source: FactSet, RBC Capital Markets

3 RBC Capital Markets

Investment Thesis
Capacity Pre-Finishing Re-Rating

Company overview
Louisiana-Pacific Corporation (“Louisiana-Pacific” or “LP”) is a leading provider of high-performance building solutions that meet the demands of builders,
remodelers, and homeowners worldwide. The company is headquartered in Nashville, Tennessee and operates plants in the US, Canada, Chile, and Brazil.
• $6.0 billion market cap and $6.0 billion enterprise value
• One of the largest North American siding producers, the second-largest OSB producer in North America, and the third-largest EWP producer in North America
• Valuation: Our $100 price target is based on a blended 12.0x EV/EBITDA multiple of our Trend EBITDA estimate of $700 million (85%) and our 2022E EBITDA of
$1,308 million (15%). We rate Louisiana-Pacific shares Outperform.
• Key risks: • Key catalysts:
 Downward changes in the level of North American new home  Conversion of Sagola and another OSB mill (either Maniwaki or Peace
construction and repair activity could adversely affect results Valley) to SmartSide production
 Weaker economic conditions could have a negative impact on demand  Ramp-up of pre-finished siding capacity
for Louisiana-Pacific’s products  Increased market penetration in the Northeast

Financial summary by segment 1 LP total return relative to peers (2015 to present)

Louisiana-Pacific West Fraser James Hardie
Siding OSB EWP South America Other
450%
6% 7% 6%
5% 400%
9%
14% 350%
5%
300%
250%
65% 32%
44% 200%
150%
100%
50%
48% 0%
35% 39%
-50%
-100%
2015 2016 2017 2018 2019 2020 2021
Revenue EBITDA Capex

Click here for more

Note: (1) Trailing five-year average. details on our $100 PT
Source: Louisiana-Pacific, FactSet, RBC Capital Markets

4 RBC Capital Markets

Investment Thesis
Capacity Pre-Finishing Re-Rating

We see three primary levers to increase shareholder value

• We forecast net incremental EBITDA of ~$230 million by 2030 from the continued expansion of the siding business over the next decade,
driven by new capacity at Houlton, Sagola, Maniwaki, Cook, Val-d’Or, and Peace Valley
Lever 1:
• The aggregate investment to start up the new siding mills would be in the $920 million range, suggesting an attractive build multiple of ~4.0x
Capacity
• The expansion would leave LP with ~3.8 bsf of capacity and ~20% market share in the total North American siding market, which is
comparable in size to James Hardie today

• We forecast net incremental EBITDA of ~$390 million by 2030 from the rollout of the pre-finished siding network, which is expected to
meaningfully increase penetration in the repair & remodel market
Lever 2:
• ExpertFinish sells at a ~75% premium to the current product offering while costing only ~30% more to produce, providing a meaningful uplift
Pre-Finishing to margins
• We expect that LP could reach 30% penetration on ExpertFinish pre-finished siding sales following an investment of ~$80 million

• Louisiana-Pacific continues to trade at a meaningful discount to high-growth branded building product peers, even after backing out the
commodity OSB and engineered wood product businesses
Lever 3: • Applying James Hardie’s current 17.2x 2022E consensus EBITDA multiple to our 2022 Siding EBITDA forecast would increase LP’s share price
Re-Rating to more than $100 per share
• As the siding business becomes a larger part of the business, we expect that the valuation will more accurately reflect the company’s less
cyclical earnings and strong growth prospects

Source: RBC Capital Markets

5 RBC Capital Markets

Investment Thesis
Capacity Pre-Finishing Re-Rating

We think Louisiana-Pacific could be worth >$240/share by 2030 driven by EBITDA growth and multiple expansion

Valuation Build-Up ($ per share)

Lever 1: Siding Capacity Expansion Lever 2: Pre-Finishing Lever 3: Siding Re-Rating

We believe that adding more siding capacity
would add ~$15/share of value to the existing
valuation, even after accounting for the loss of
OSB production at converted mills. This gain is
partially offset by the capital cost of adding
capacity.
Pre-finishing capacity would allow LP to sell its
siding at a far higher price while only
marginally increasing costs. Leveraging the
increased production capacity from Lever 1,
this would result in higher margins and
increased EBITDA at a minimal capital cost.
Leveraging the increased siding
EBITDA from Levers 1 and 2, a re-
rating to a siding company
multiple would have a material
positive impact on the share price.

$102

$25 $1
$15 $10 $242

$47

$140 $140 $140

$111 $116 $116 $116

$63 $64

Current Change in Capacity Less: Capex Value Pre-Finished Less: Capex Value Siding Re-Rating Expected Value
Share Price net cash Expansion Build-Up Siding Build-Up to 15x EBITDA (per share)

Source: RBC Capital Markets

6 RBC Capital Markets

Lever 1: Capacity
Capacity Pre-Finishing Re-Rating

We see plenty of room for LP to grow in the $6.4 billion total addressable market (“TAM”)

Repair & Remodel Market

Repair &
• Total market size: $4.7 billion; addressable market size: $3.1 billion; LP market share of addressable market: 10%
Remodel
• Advantages: Industry-leading warranty (50 years); easy to work with
$3.1 billion TAM
• Key drivers: Home equity, consumer confidence, economic growth, aging homes
• New big-box home improvement exclusive relationship with Home Depot to specifically promote lap & trim products
• SmartSide Panel products still available at Lowe’s and Menards
10% • Taking market share from vinyl in the Northeast

New Single-Family Construction Market

New
• Total market size: $3.5 billion; addressable market size: $1.9 billion; LP market share of addressable market: 13%
Single-Family
• Advantages: Industry-leading warranty (50 years); easier to install and finish, resulting in less labor and fewer callbacks
$1.9 billion TAM
• Key drivers: Single-family housing starts, household formation
• Launched BuildersSeries Siding this year with the aim to increase market penetration with the big homebuilders
• Key relationships include ABC Supply Co., Beacon Roofing Supply, BlueLinx, Boise Cascade, Builders FirstSource, Doman Building Materials,
13% Lansing Building Products, McCoy’s Building Supply, US Lumber, Wausau Supply, Weyerhaeuser Distribution, 84 Lumber

New New Multi-Family Construction Market

Multi-Family • Total market size: $1.5 billion; addressable market size: $0.38 billion; LP market share of addressable market: 10%
$0.38 billion • Advantages: Industry-leading warranty (50 years); easier to install and finish, resulting in less labor and fewer callbacks
TAM • Key drivers: Multi-family housing starts
• This segment is less of a focus for LP
10%

Outdoor Outdoor Building Structures Market

Structures • Total market size: $1.3 billion; addressable market size: $1.0 billion; LP market share of addressable market: 17%
$1.0 billion TAM • Advantages: Specialized products for shed applications (e.g., SmartFinish, SilverTech, ProStruct Roofing & Flooring)
• Key drivers: Consumer confidence, economic growth, aging homes
• Forming retail partnerships to expand product access and promote both LP SmartSide and the builder’s brand
17% • LP is very active in the shed market and has future growth opportunities in fencing

Notes: LP SmartSide revenue totaled $915 million in 2020; grey bubbles show total TAM size while dark blue bubbles illustrate LP’s market share.
Source: Louisiana-Pacific (2020), RBC Capital Markets

7 RBC Capital Markets

Lever 1: Capacity
Capacity Pre-Finishing Re-Rating

Siding is a great business

Siding is Louisiana-Pacific’s best business
Siding is less volatile than OSB – Given that SmartSide is priced based on a list price
rather than as a commodity like OSB, margins and EBITDA dollars per unit have
historically been far more stable. We expect that the siding segment will continue to
be less volatile than OSB in most scenarios given its higher exposure to repair &
remodel activity vs. OSB’s higher exposure to new residential construction.
Siding is more profitable than OSB – Outside of the exceptional market conditions
experienced over the last year, siding has almost always been more profitable than
OSB. Over the last decade, siding has been far more profitable than OSB, averaging
$120/msf vs. OSB at $71/msf. Even with record OSB pricing in both 2017/2018 and
2020/2021, Siding has still mostly outperformed OSB.
Siding has room to grow – LP accounts for less than 15% of the addressable siding
market, and we think SmartSide could take market share from other substrates
(such as vinyl) whereas adding capacity in OSB would likely reduce pricing.
LP SmartSide’s financial performance is comparable to top building products
LP SmartSide has experienced very strong revenue growth – Over the last three
years, LP SmartSide revenue has grown at a 12% CAGR, which is in line with
management’s long-term target of +10–12% per year. Organic growth above 10%
would firmly place LP Smartside in the top tier of building products growth stories.
SmartSide margins are comparable to best-in-class peers – LP set a new record for
its siding segment margins at 25.7% in 2020 and reached 31.6% during Q1/21. We
believe the strong margins reflect LP’s strong market position as a branded building
product, similar to Trex, Simpson Strong-Tie, and James Hardie.
Growth should be sustainable; margins should be expandable – Given the
company’s high-visibility volume growth and track record of price increases, we see
sustained growth going forward. As LP adds new, larger facilities and upgrades
existing ones, we think it could see higher margins in the siding segment.

Siding EBITDA per MSF OSB EBITDA per MSF 20%

$700
TREX

Revenue Growth (3Y CAGR)

5-Year Average
$600 15% PATK
Siding: $155/msf WMS
OSB: $134/msf AZEK
$500 AMWDPGTI LP SmartSide
10-Year Average 10%
$400
Siding: $120/msf SSD James Hardie
KRX-IE AAON
$300 OSB: $71/msf North America
IIIN SUM SHW JHX
5% FBHS EXP
$200 TILE SWK ALLE
DOOR
OC
$100
ROCK AWI
USCR MHK
$0 0%
0% 5% 10% 15% 20% 25% 30% 35%
-$100
EBITDA Margin (2020A)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Note: James Hardie and PGT Innovations revenue growth adjusted for large acquisitions, where possible.
Source: Company reports, FactSet, RBC Capital Markets

8 RBC Capital Markets

Lever 1: Capacity
Capacity Pre-Finishing Re-Rating

We think LP could more than double siding capacity

High-visibility growth through 2023 – LP is
already in the process of converting the Houlton
LSL mill to siding and has laid out plans to
convert its Sagola OSB mill to siding in 2023.
Combined, these two projects will increase LP’s Louisiana-Pacific Louisiana-Pacific
siding capacity by ~30%. Peace Valley Val-d’Or
conversion 225 mmsf
550 mmsf Idled mill; conversion
Several options to sustain growth thereafter –
Management has several options to add
Louisiana-Pacific Louisiana-Pacific
capacity, with the only major constraint being Cook Houlton
availability of aspen fiber. With three new OSB greenfield 220 mmsf
mills starting up between 2023 and 2024, we 400 mmsf conversion
think it would make sense to convert Maniwaki
next to keep OSB markets balanced. Louisiana-Pacific Louisiana-Pacific
Sagola Maniwaki
Thereafter, we expect a greenfield at Cook, a
conversion 450 mmsf
conversion at Val-d’Or (Trim focused), and 300 mmsf conversion
eventually a conversion at Peace Valley. LP
could also add another line at either Houlton or
Sagola, but we think that these would more
likely be in the 2030s as more capacity is
needed.

Nameplate Capacity 1, 2 2021 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Houlton, Maine +220 +220 +220 +220 +220 +220 +220 +220 +220

Sagola, Michigan +300 +300 +300 +300 +300 +300 +300 +300

Maniwaki, Quebec +450 +450 +450 +450 +450 +450

Cook, Minnesota +200 +400 +400 +400

Val-d'Or, Quebec +225 +225

Peace Valley, British Columbia +550

Cumulative Additions 0 220 520 520 970 970 1,170 1,370 1,595 2,145

Total Siding Capacity 1,685 1,905 2,205 2,205 2,655 2,655 2,855 3,055 3,280 3,830

Notes: (1) Million square feet, 3/8" basis. (2) Reflects our best estimate of what a further siding expansion could look like.
Source: Louisiana-Pacific, RBC Capital Markets estimates

9 RBC Capital Markets

Lever 1: Capacity
Capacity Pre-Finishing Re-Rating

Capital Cost: $920 million
We estimate that it would cost ~$920 million to complete the six new siding mills –
With historical conversion costs in the $130 million range, we think that future
conversions would fall in a similar price range. However, we think converting a large
OSB such as Peace Valley would cost more than some of the projects previously
undertaken. Finally, the greenfield at Cook, Minnesota would cost far more than
previous conversion projects. We view the net build multiple of ~4.0x as attractive.
Growth could be financed out of cash flow – Given the consistent profitability of the
existing siding business, the occasional windfall profits from the OSB business, and the
likely sale of the EWP business, we think LP could maintain its current capital allocation
policy of returning capital to shareholders through the dividend and share repurchases.
The pace and order of future capacity additions could easily be adjusted based on
capital and business needs.
Net Financial Impact: +$230 million of EBITDA
We think the incremental Siding capacity could generate ~$410 million of EBITDA per
year in a steady-state – If run at levels of profitability similar to those of the existing
network, we think that the new capacity would more than double Siding segment
EBITDA. We see further upside, as new plants would be more modern and efficient.
The loss of OSB production at Sagola, Peace Valley, and Maniwaki would reduce mid-
cycle EBITDA by ~$180 million per year – In our view, Peace Valley and Maniwaki are
some of LP’s least competitive OSB mills, with both having taken market downtime
over the last decade. While Sagola is considered one of LP’s best OSB mills, we think it
would also be a very good siding mill. OSB earnings have historically been quite volatile,
so increased exposure to siding should result in more stable earnings going forward.
Although not reflected in our analysis, we believe that converting OSB mills to siding
would have a positive impact on OSB pricing, partially offsetting the lost volume.

$MM, Unless otherwise noted

Incremental Siding EBITDA Lost OSB EBITDA Net EBITDA Impact
$500 Houlton Sagola Maniwaki Cook Line 1 Cook Line 2 Val-d’Or Peace Valley
$130 million $130 million $150 million $170 million $50 million $130 million $160 million
$400

$300

$200

$100

$0

-$100

-$200

-$300
2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Notes: Forecasts on a normalized mid-cycled basis and do not account for future changes in mix/pricing; value under mill name indicates our estimate of the capital cost to complete the conversion/build of the mill.
Source: Louisiana-Pacific, RBC Capital Markets estimates

10 RBC Capital Markets

Lever 2: Pre-Finishing
Capacity Pre-Finishing Re-Rating

What is pre-finishing?
Introduced in December 2019, LP SmartSide ExpertFinish is Louisiana-Pacific’s pre-finished siding offering that is available in 16 colors (see
below). The pre-finished siding is delivered directly from the facility with an acrylic latex paint that is “guaranteed to look great and remain
durable for years.” Pre-finished siding is particularly favored in the repair & remodel market because it reduces install time. Louisiana-Pacific had
historically used third-party pre-finishers, but it recently began to expand its production capabilities through acquisitions and organic growth.

Percentage of Siding Volume Pre-Finished by Louisiana-Pacific SmartSide Unit Pricing ($ per msf)

30% $1,225

$700

2%

2020 Target SmartSide SmartSide ExpertFinish

Pre-Finished Shipments (mmsf) Unit Production Cost ($ per msf)

1,100 $650

$500

28

2020 Target SmartSide SmartSide ExpertFinish

Note: We estimate that SmartSide could be sold at a ~50% premium in the long term, but the premium is currently in the 80%+ range, so there could be some upside.
Source: RBC Capital Markets estimates

11 RBC Capital Markets

Lever 2: Pre-Finishing
Capacity Pre-Finishing Re-Rating

Buy or build?

We prefer the “build” option Existing North American LP SmartSide Pre-Finishing Locations

Approved pre-finishers consist of

distributors and specialists – We found that Hanson Building Michigan
Diamond Kote Louisiana-Pacific Goodfellow, Inc.
Materials Pre-Stain 2
the largest pre-finishers are mostly owned by Schofield, WI Green Bay, WI 3
Wyoming, MI
Delson, QC
Ramsey, MN
building product distributors. In the
Midwest, Wausau Supply Company owns Woodtone Flashing by Edmund A. Allen
Menards
Diamond Kote and Lumberman’s owns Building Products Design Lumber
Eau Claire, WI
Everett, WA Wyoming, MN Momence, IL
Michigan Pre-Stain. In the West, UFP
Industries owns Northwest Factory Finishes.
Pre-finishing specialists tend to work with Northwest Quality Wood
multiple substrates, which is less attractive Factory Finishes 1 Priming, Inc.
for LP’s purposes, in our view. Missoula, MT Bow, NH

Spectrum Mill Services

Pre-finishers remain key partners – We think Industries, Inc. Cobleskill, NY
LP should attempt to partner with or acquire White City, OR
the major pre-finishers to keep these key
Unity Forest
partners involved in the business as LP builds Products
K-Line
out its own capacity. In the future, we expect Montgomery, IN
Yuba City, CA
independent pre-finishers to provide custom
colors and service smaller markets. Louisiana-Pacific
Roaring River, NC
We estimate that it would take another
~$80 million of investment to reach the 30% Legacy Pre-
Finishing, Inc.
target – Pre-finishing capacity is not very Troutman, NC
expensive or complicated to build, with only
another $80 million required to reach J.M. Thomas Rocky Mountain Parker’s Prime Midwest Factory
Louisiana-Pacific
Forest Products Pre-Stain Inc. Finishes
management’s 30% target. We expect that Ogden, UT Denver, CO Sherman, TX Sioux Falls, SD
Granite City, IL 4
the Northeast will be a key focus before
building out a national network with Key Pre-Finished Siding Brands
locations in the West and South. Pre-finishing
locations are preferably situated near the
housing market, as this reduces
transportation costs and the risk of damage.

Notes: (1) Acquired by UFP Industries in August 2019 for $17.8 million, annual revenue of ~$14 million. (2) Acquired by Lumbermen’s in 2017. (3) Acquired on June 3, 2019 for ~$7 million. (4) Acquired from BlueLinx for ~$3 million on October 8, 2019.
Source: RBC Capital Markets

12 RBC Capital Markets

Lever 2: Pre-Finishing
Capacity Pre-Finishing Re-Rating

Financial Impact: $390 million of incremental EBITDA at a cost of ~$80 million

Key assumptions

1. Capacity expansion proceeds as outlined on page 9.

2. SmartSide ExpertFinish is sold at a 75% premium to the current SmartSide sales mix
• For comparison, James Hardie ColorPlus is priced at a ~56% premium to HardieBoard and a 150–200% premium to Cemplank
3. SmartSide ExpertFinish costs about ~30% more per unit (or ~$150/msf) to produce than regular SmartSide
4. SmartSide ExpertFinish increases linearly as a percentage of SmartSide volume, from ~5% in 2022 to 25% in 2030
5. We do not assume any regular annual price increases in this analysis

Sales volume and sales mix (2022E to 2030E) ExpertFinish could add ~$390 million of EBITDA on a trend basis

Sales Volume [mmsf, LHS] % Pre-Finished [RHS] SmartSide EBITDA [$MM, LHS] ExpertFinish EBITDA [$MM, LHS] EBITDA Margin [%, RHS]
4,000 30%
$1,200 40%
3,500
25%
$1,000
3,000
36%
35%
20%
2,500 $800

31%
2,000 15%
$600 30%

1,500
10%
$400
1,000 25%
5% $200
500

0 0% $0 20%
2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Source: RBC Capital Markets estimates

13 RBC Capital Markets

Lever 3: Re-Rating
Capacity Pre-Finishing Re-Rating

LP trades at a meaningful discount to James Hardie

EV/EBITDA (NTM) LP is trading at a growing discount to James Hardie

• Louisiana-Pacific has historically traded in line with West Fraser, a high-quality and
low-cost producer of lumber and now OSB following its acquisition of Norbord
• James Hardie had historically traded in the 12–14x range, but it has seen its
multiple increase into the 18x range over the last year
• While the growing discount to JHX is partially attributable to outsized OSB EBITDA
this year, we think that the gap will close as siding becomes a larger percentage of
LP’s business
• LP is starting to trade at a premium to West Fraser, which we think is likely to
continue as LP moves away from commodity OSB and EWP markets

Louisiana-Pacific West Fraser James Hardie Premium (Discount) vs. WFG Premium (Discount) vs. JHX

20.0x 6.0x

18.0x 4.0x

2.0x
16.0x

0.0x
14.0x

-2.0x
12.0x LP Investor Day
-4.0x
10.0x
-6.0x
8.0x
-8.0x

6.0x
-10.0x

4.0x
-12.0x

2.0x -14.0x

0.0x -16.0x
2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021

Source: FactSet consensus, RBC Capital Markets

14 RBC Capital Markets

Lever 3: Re-Rating
Capacity Pre-Finishing Re-Rating

LP is becoming a different business

Although LP’s 2020 revenue was increased by elevated OSB pricing, we see the company’s revenue mix shifting to siding as more OSB mills are converted to siding. We also
assume that the company is successful in its strategic review process for its engineered wood product segment, further reducing exposure to commodity markets. Increased
siding capacity and higher average selling prices (partially attributable to increased sales of pre-finished siding) will result in higher Siding segment revenue, while more
normalized OSB pricing will result in lower OSB revenue. In the long term, we expect North American Siding to account for a similar percentage of revenue as it does for James
Hardie.

Revenue Mix 2010 2015 2020 Long-Term1,2,3

9%
26% 24% 22%
31% 34% 34% 16%

75%
44% 43% 44%

3% 14% 13%
29% 20%
12%
15%

71% 76% 71% 75%

14% 8% 14% 11% 12%

30%
36%
52%
40%

56% 52%
75%

North American Siding Panels Other

Notes: (1) Assumes LP sells its EWP segment. (2) James Hardie based on our FY25 segment forecasts. (3) West Fraser based on our trend revenue forecasts.
Source: FactSet, RBC Capital Markets

15 RBC Capital Markets

Lever 3: Re-Rating
Capacity Pre-Finishing Re-Rating

Re-rating to a siding valuation would have a large positive impact on value

The Siding segment is valued at an implied ~8.5x EBITDA multiple by the market
Applying West Fraser’s current trading multiple to Louisiana-Pacific’s non-siding
businesses, we found that the market is valuing LP’s siding business at only ~8.5x
EBITDA. In our view, this is far too low considering the superior margin profile and
growth prospects. The implied valuation is far below high-growth peers such as
James Hardie, Trex, Azek, Simpson, and Armstrong Manufacturing.
LP’s valuation would increase substantially if Siding was valued at JHX’s multiple
Applying West Fraser’s current trading multiple to Louisiana-Pacific’s non-siding
businesses and James Hardie’s current trading multiple to LP’s siding business, we
see significant valuation upside from a more accurate market multiple. In our
valuation, we apply a modest discount to James Hardie’s multiple given the
company’s unique position in the Australian equity market.

Current Price: Price with Only Re-Rating:

$63.28 per share ~$107 per share

$10,080 $84 $10,164

$5,909 $84 $5,993

$7,908

$3,737

$2,172 $2,172

Current Non-Siding Implied Enterprise Net Market Current Non-Siding Current Siding Value Implied Value Net cash Market cap
Business @ WFG Siding Value Value Cash Cap Business @ WFG @ JHX Multiple
Multiple Multiple
Note: All values in $MM, unless otherwise noted.
Source: FactSet, RBC Capital Markets estimates

16 RBC Capital Markets

Lever 3: Re-Rating
Capacity Pre-Finishing Re-Rating

LP’s other businesses could be sold or spun off to accelerate re-rating

Once Houlton, Sagola, Maniwaki, and Peace Valley have been converted to SmartSide production, we think that the Siding business could be separated from the rest of the
more commodity-oriented OSB, EWP, and South America segments. LP is currently exploring strategic alternatives for the Engineered Wood Products business, which could
include the sale in whole or in part of the business. We think that Siding could be spun off or the non-siding businesses could be sold to strategic buyers.

Strategic Alternatives for Non-Siding Businesses

Business Profile (2030E)

• Five OSB mills (Carthage, Hanceville, Jasper, Roxboro, and Clarke County)
• 2,645 mmsf of production capacity, which would make LP the fifth-largest OSB producer in North America (vs. second-largest today)
North American
• Forecast annual revenue: ~$690 million
Oriented Strand Board • Forecast annual EBITDA: $175 million
• Forecast valuation: $875 million to $1.05 billion at a ~5-6x EBITDA multiple (or ~$330–400/msf)
• Potential strategic acquirers: West Fraser, Georgia-Pacific, Weyerhaeuser, Huber, Tolko, RoyOMartin, Arauco, Kronospan

Business Profile
• LP is currently exploring strategic alternatives for the business
North American • Includes two LVL mills, an I-Joist plant in California, and a joint venture I-Joist plant in Quebec
Engineered Wood • 2022E revenue: $582 million
Products • 2022E EBITDA: $64 million
• Forecast valuation: ~$165 million (or 5.4x our trend EBITDA estimate, in line with Boise Cascade’s acquisition of Georgia-Pacific’s EWP business)
• Potential strategic acquirers: Weyerhaeuser, Boise Cascade, Roseburg, Murphy, West Fraser, Resolute Forest Products

Business Profile
• Three OSB mills (Panguipulli, Lautaro, and Ponta Grossa) and an I-Joist mill
• 750 mmsf of production capacity
South American
• Forecast annual revenue: ~$250 million
Oriented Strand Board • Forecast annual EBITDA: $80 million
• Forecast valuation: $400–550 million at a 5–7x EBITDA multiple (or ~$530–750/msf)
• Potential strategic acquirers: West Fraser, Arauco, Duratex, Kronospan

Business Profile
• Entekra is a design, engineering, and manufacturing company that provides off-site framing for both residential and commercial construction
• LP acquired a controlling interest in the business in two transactions between 2018 and 2019
Entekra • LP aims to leverages its large-scale manufacturing capabilities and capital to help scale the business
• Entekra currently operates a single manufacturing plant in California
• Potential exit options: Sale to a strategic buyer or an IPO

Source: RBC Capital Markets

17 RBC Capital Markets

Appendices
Appendix
Capacity Pre-Finishing Re-Rating

Long-term modeling assumptions

Louisiana-Pacific Corporation Fiscal 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
NYSE: LPX Calendar 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24 31-Dec-25 31-Dec-26 31-Dec-27 31-Dec-28 31-Dec-29 31-Dec-30
KEY ASSUMPTIONS
SmartSide Volume Growth (Y/Y) % 7.4% 8.3% 13.0% 18.2% 15.0% 10.0% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5%
OSB 7/16", North Central $ per msf $350 $209 $440 $815 $680 $438 $275 $275 $275 $275 $275 $275 $275

SEGMENTED SALES
Siding $MM $942 $963 $959 $1,162 $1,387 $1,586 $1,748 $1,926 $2,122 $2,338 $2,577 $2,839 $3,128
OSB $MM $1,305 $778 $1,220 $2,369 $1,636 $986 $1,071 $897 $897 $897 $897 $897 $691
EWP $MM $391 $396 $389 $594 $582 $550 $550 $550 $550 $550 $550 $550 $405
South America $MM $161 $159 $169 $250 $225 $204 $204 $204 $194 $194 $194 $194 $252
Other $MM $29 $19 $52 $96 $104 $104 $104 $104 $104 $104 $104 $104 $100
Total $MM $2,828 $2,314 $2,788 $4,468 $3,933 $3,431 $3,678 $3,682 $3,868 $4,084 $4,322 $4,585 $4,576

SEGMENTED EBITDA
Siding $MM $235 $177 $246 $328 $440 $566 $584 $651 $700 $740 $858 $991 $1,150
OSB $MM $455 $10 $519 $1,499 $767 $167 $196 $161 $161 $161 $161 $226 $175
EWP $MM $35 $26 $23 $52 $64 $44 $44 $44 $44 $44 $44 $44 $35
South America $MM $40 $34 $42 $84 $78 $57 $57 $57 $54 $54 $54 $54 $80
Other $MM ($2) ($11) ($19) ($19) ($10) ($5) $0 $10 $10 $10 $10 $10 $10
Corporate $MM ($103) ($30) ($30) ($24) ($30) ($30) ($30) ($40) ($40) ($45) ($45) ($45) ($45)
Total $MM $660 $206 $781 $1,919 $1,308 $799 $851 $883 $929 $964 $1,082 $1,281 $1,405

Siding as a % of total EBITDA % 36% 86% 31% 17% 34% 71% 69% 74% 75% 77% 79% 77% 82%

CASH FLOW STATEMENT

Cash from operations $MM $508 $159 $659 $1,450 $1,071 $672 $644 $720 $747 $767 $865 $1,023 $1,137
Capital expenditures $MM ($214) ($162) ($77) ($266) ($200) ($160) ($230) ($200) ($280) ($200) ($240) ($280) ($200)
Free cash flow $MM $260 $69 $595 $1,257 $849 $488 $460 $517 $476 $585 $640 $759 $938

BALANCE SHEET
Net debt to Adjusted EBITDA X.X -0.8x 1.0x -0.2x -0.3x -1.0x -2.2x -2.5x -2.9x -3.1x -3.5x -3.6x -3.5x -3.8x
Total debt to Adjusted EBITDA X.X 0.5x 1.8x 0.5x 0.2x 0.3x 0.5x 0.4x 0.4x 0.4x 0.4x 0.3x 0.3x 0.3x
Net debt to capital % (21%) 11% (7%) (19%) (37%) (44%) (46%) (50%) (52%) (56%) (58%) (61%) (65%)

Click here to return

Note: For a copy of our Louisiana-Pacific model, please contact us or your RBC Capital Markets representative. to page 3
Source: Louisiana-Pacific, RBC Capital Markets estimates

19 RBC Capital Markets

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Calculating our one-year $100 price target

Base case valuation: Our $100 price target is based on a blended 12.0x EV/EBITDA multiple of our trend EBITDA estimate of $700 million (85%) and our 2022E EBITDA of $1,308
million (15%). We rate Louisiana-Pacific shares Outperform.

Upside scenario: For our upside scenario of $125, we assume a blended multiple of 15.0x.

Downside scenario: For our downside scenario of $30, we assume a blended multiple of 3.5x.

Base Case Valuation

$MM, unless otherwise noted EBITDA EBITDA 1 Year Forward Valuation
Segment 2022E Trend Multiple Total Per share % of Total
Siding $440 $435 16.5x $7,190 $76 76%
OSB $767 $180 7.0x $1,876 $20 20%
EWP $64 $31 5.0x $180 $2 2%
South America $78 $79 6.0x $472 $5 5%
Other -$10 $10 10.0x $69 $1 1%
Corporate -$30 -$35 11.9x -$406 -$4 -4%
Total $1,308 $700 12.0x $9,382 $99 99%
Add: Net cash $65 $1 1%
Market Value $9,447 $100 100%

Click here to return

to page 4
Source: Company reports, RBC Capital Markets estimates

20 RBC Capital Markets

Appendix
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Pricing comparables
7-Sep-21 Market Cap EV EV/EBITDA EBITDA Growth (%) P/E Net Debt/ Dividend
Company Ticker Price ($) ($MM) ($MM) 20A 21E 22E 19A - 20A 20A - 21E 21E - 22E 20A 21E 22E EBITDA Yield
Louisiana-Pacific Corporation LPX $63.28 $5,993 $5,909 7.6x 3.1x 4.5x n.m. 34.9% (12.0%) 14.6x 4.7x 6.8x 0.0x 1.1%
High Growth Building Prodcuts
Armstrong World Industries AWI $100.08 $4,814 $5,414 16.4x 14.3x 12.8x (18.1%) 4.6% 3.9% 27.6x 23.4x 20.1x 1.7x 0.8%
AZEK Company AZEK $40.48 $6,356 $6,612 31.0x 24.2x 20.0x n.m. 8.5% 6.6% n.m. 42.9x 34.8x 1.0x 0.0%
James Hardie Industries PLC JHX-AU A$54.57 A$24,322 $18,701 25.0x 20.0x 17.2x 21.5% 7.6% 5.3% 39.2x 30.5x 25.7x 0.9x 0.0%
Kingspan Group Plc KRX-IE €96.46 €17,650 €18,464 29.3x 22.5x 21.2x 3.3% 9.2% 2.0% 44.9x 34.0x 31.8x 1.5x 0.4%
Simpson Manufacturing Co. SSD $110.54 $4,824 $4,562 15.3x 11.9x 12.5x 33.6% 8.6% (1.4%) 25.9x 20.0x 20.7x n.m. 0.9%
Trex Company, Inc. TREX $111.45 $12,891 $12,973 n.m. 36.8x 30.6x 25.0% 11.3% 6.3% n.m. n.m. 45.8x 0.3x 0.0%
Average 23.4x 21.6x 19.0x 13.1% 8.3% 3.8% 34.4x 30.2x 29.8x 1.1x 0.4%
Lumber
Canfor Corporation CFP-CA C$28.42 C$3,558 C$3,269 3.3x 1.3x 2.8x n.m. 38.0% (23.0%) 6.2x 2.3x 6.6x 0.0x 0.0%
Conifex Timber Inc. CFF-CA C$1.89 C$88 C$108 9.2x 2.0x 2.6x n.m. 67.3% (8.8%) n.m. 3.0x 4.4x n.m. 0.0%
Interfor Corporation IFP-CA C$29.00 C$1,890 C$1,950 3.7x 1.5x 2.8x n.m. 35.9% (18.7%) 6.2x 2.2x 4.8x 0.0x 0.0%
West Fraser Timber Co. Ltd. WFG $79.78 $9,679 $7,945 6.3x 1.4x 3.0x n.m. 67.2% (23.6%) 8.2x 3.0x 8.2x 0.0x 1.0%
Western Forest Products Inc. WEF-CA C$2.18 C$815 C$737 8.5x 2.6x 4.0x n.m. 47.8% (13.2%) 24.2x 4.5x 8.0x 0.0x 1.8%
Average 6.2x 1.7x 3.0x n.m. 51.2% (17.5%) 11.2x 3.0x 6.4x 0.0x 0.6%
North American Building Products
Beacon Roofing Supply, Inc. BECN $51.89 $3,700 $5,933 12.6x 9.2x 9.0x (1.4%) 11.2% 0.7% 21.5x 11.6x 10.9x 2.9x 0.0%
Boise Cascade Co. BCC $57.69 $2,290 $2,173 5.1x 2.4x 5.1x 97.3% 29.3% (22.7%) 9.4x 3.8x 9.8x n.m. 0.7%
Gibraltar Industries, Inc. ROCK-US $71.66 $2,369 $2,399 16.9x 13.5x 10.9x 11.1% 7.7% 7.4% 24.2x 21.2x 17.4x 0.2x 0.0%
Masco Corporation MAS $59.01 $14,871 $17,453 12.1x 10.8x 10.4x 15.7% 3.8% 1.4% 18.9x 15.9x 14.5x 1.4x 1.6%
Owens Corning OC $93.25 $9,838 $12,271 9.0x 6.4x 6.3x 6.4% 12.0% 0.6% 17.9x 10.5x 10.0x 1.3x 1.1%
UFP Industries, Inc. UFPI $72.50 $4,376 $5,028 11.7x 7.1x 7.5x 36.6% 18.4% (1.8%) 18.2x 10.1x 10.9x 0.9x 0.8%
Average 11.2x 8.2x 8.2x 27.6% 13.7% (2.4%) 18.3x 12.2x 12.3x 1.4x 0.7%
US Distributors
Builders FirstSource, Inc. BLDR $54.33 $11,318 $13,722 19.6x 6.0x 7.5x 35.7% 48.8% (7.5%) 18.0x 8.5x 12.0x 1.4x 0.0%
GMS Inc. GMS $50.27 $2,210 $3,368 10.6x 7.7x 7.5x 6.1% 11.0% 0.9% 14.2x 9.4x 8.9x 3.2x 0.0%
SiteOne Landscape Supply, Inc. SITE $201.22 $9,214 $9,742 37.4x 27.0x 25.2x 29.4% 11.6% 2.3% n.m. 46.6x 44.4x 1.5x 0.0%
TopBuild Corp. BLD $216.81 $7,193 $7,741 17.7x 13.2x 11.7x 21.6% 10.3% 4.3% 29.8x 20.1x 17.0x 1.1x 0.0%
Average 21.3x 13.5x 13.0x 23.2% 20.4% (0.0%) 20.7x 21.1x 20.6x 1.8x 0.0%

Notes: RBC Capital Markets estimates for Louisiana-Pacific, FactSet consensus for peers; currency in US dollars unless otherwise noted.
Source: FactSet, RBC Capital Markets estimates

21 RBC Capital Markets

Appendix
Capacity Pre-Finishing Re-Rating

LP Siding financial performance

Indexed Volume Growth relative to James Hardie [Quarterly, 2010 to Present] Indexed Pricing Growth relative to James Hardie [Quarterly, 20101 to Present]

Louisiana-Pacific James Hardie Louisiana-Pacific James Hardie

160% 35%
140% 30%
120%
25%
100%
80% 20%

60% 15%
40% 10%
20%
5%
0%
-20% 0%

-40% -5%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Adjusted EBITDA and Adjusted EBITDA Margin [Annual] Capital Expenditures [Annual]

Adjusted EBITDA ($MM, LHS) Adjusted EBITDA margin (%, RHS) Capital Expenditures [$MM, LHS] Capital Expenditures as a % of Sales [%, RHS]

$300 30% $140 30%

$250 25% $120 25%

$100
$200 20% 20%
$80
$150 15% 15%
$60
$100 10% 10%
$40
$50 5% $20 5%

$0 0% $0 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Note: (1) Started in Q2/2010 to normalize for very low pricing during Q1/2010.
Source: Louisiana-Pacific, RBC Capital Markets

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Post-expansion, LP would be about the size of James Hardie today

LP is currently half the size of James Hardie Nameplate Manufacturing Capacity (3/8" Basis) – Louisiana-Pacific and James Hardie

Capacity – James Hardie’s North American

nameplate production capacity is nearly 3x
Louisiana-Pacific Louisiana-Pacific Louisiana-Pacific Louisiana-Pacific
Louisiana-Pacific’s; however, James Hardie has Dawson Creek Two Harbors Hayward Tomahawk
historically produced at ~60–70% of nameplate 300 mmsf 220 mmsf 475 mmsf 230 mmsf
capacity given that more complex and higher-
value products require slower speeds.
Louisiana-Pacific
Therefore, we estimate that James Hardie’s Newberry
effective capacity is only ~2x Louisiana-Pacific’s. 165 mmsf
Louisiana-Pacific
Swan Valley
Current expansion plans – James Hardie 300 mmsf
started a new fiber cement plant in Prattville, Louisiana-Pacific
Houlton
Alabama earlier this year and plans to restart 220 mmsf
its plant in Summerville, South Carolina in James Hardie Start-up: Q1/22
Q1/22. Louisiana-Pacific is currently converting Tacoma
its LSL mill in Houlton, Maine to SmartSide 600 mmsf
James Hardie
production. Thereafter, the company expects
Peru
to convert its OSB mill in Sagola, Michigan to 670 mmsf
siding in 2023. James Hardie
Reno
360 mmsf
James Hardie
Pulaski
720 mmsf
Effective Production Capacity James Hardie
Fontana
300 mmsf
James Hardie
~2x Summerville
230 mmsf
Re-start: Q1/22

James Hardie
Plant City
720 mmsf
James Hardie James Hardie James Hardie
Louisiana-Pacific James Hardie Cleburne Waxahachie Prattville
800 mmsf 430 mmsf 720 mmsf
Note: James Hardie figures have been converted to 3/8" thickness to compare on a like-to-like volume basis.
Source: Louisiana-Pacific, RBC Capital Markets

23 RBC Capital Markets

Appendix
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How LP’s engineered wood siding fits into the North American siding landscape

Share of Total Siding & Trim 1 Key Categories in the Addressable Siding Segment

Metal, 3%
Stucco, 4%

Polymer Composite, 5%

Engineered Wood, 6%

Other, 9%

Wood, 10%

Masonry Veneer, 12%

Fiber Cement, 14%

Primary Type of Exterior Wall Material of New Single Family Houses Completed 2

Stucco Vinyl Fiber Cement Brick Wood Other Northeast Midwest South West

Vinyl, 19% 100% 100% 1% 4%

8% 8% 6% 5% 5% 5% 5%
5% 5% 5% 5% 19%
24% 23%
23% 23% 22% 22% 21% 20% 19%
80% 23% 24% 24% 25% 80% 47% 41%
9% 45%
60% 13% 15% 16% 16% 18% 19% 20% 20% 20% 21% 22% 60%
56%
93%
55%
40% 40% 51%
36% 34% 33% 31% 30% 27% 27% 27% 26% 25% 25% 34% 49%
52%
20% 20% 19%
Brick, 19% 27% 27% 14%
17% 17% 19% 22% 23% 24% 24% 24% 25% 14% 18% 7% 13%
0% 0% 6% 5%
2% 3%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Brick Wood Stucco Vinyl Fiber Other
siding cement
Notes: (1) Excluding outdoor building structures (dollar value). (2) 2020, percentage of units completed.
Source: Lowe’s, Louisiana-Pacific, US Census Bureau, RBC Capital Markets

24 RBC Capital Markets

Appendix
Capacity Pre-Finishing Re-Rating

OSB market overview

The North American OSB industry has become more consolidated 1 North American OSB pricing ($ per msf) 2

2005 2021 Average Max Min 2020 2021

$1,400
Other, Martco, Other, West
Tolko, 11% Louisiana- 6% 6%
Fraser, $1,200
5% Pacific, 22% Huber, 28% $1,000
Grant, 8%
7% $800
Tolko,
Huber, 8% $600
Weyer-
8% haeuser, $400
13%
Georgia- $200
Weyerhaeuser, Louisiana-
Pacific, Pacific, 17% $0
Norbord, 12%
9% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Ainsworth, 12% 13% Georgia-Pacific, 15%

North American industry operating rate

Actual Forecast
101% 98% 97% 98% 96% 94%
100% 93%
86% 89% 86% 89%
84%
80% 75%

60%

40%

20%

0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E

Notes: (1) North American OSB capacity by producer. (2) Based on South East regional pricing.
Source: Random Lengths, Company reports, RBC Capital Markets

25 RBC Capital Markets

Appendix
Capacity Pre-Finishing Re-Rating

Prefinished Staining Product Incorporated, acquired by LP in 2019

Note: PSPI Google Street View as of July 2018.

Source: RBC Capital Markets

26 RBC Capital Markets

Appendix
Capacity Pre-Finishing Re-Rating

LP’s SmartSide business trades at a meaningful discount to building product peers

35.0x

TREX

30.0x

25.0x

AAON
SHW
KRX-IE
AZEK
EV / EBITDA (2022E)

20.0x
ALLE
LII

JHX
AOS
15.0x
AWI
SSD WMS
SWK
ROCK FBHS
MAS
10.0x EXP
SUM
PGTI LP SmartSide
APOG TILE
CNR AMWD
CSR-ASX DOOR
MHK OC PATK
CSTE NX
5.0x

0.0x
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Rule of 40 (Revenue Growth + EBITDA Margin)

Notes: James Hardie and PGT Innovations revenue growth adjusted for large acquisitions, where possible; revenue growth based on 2018–20 revenue CAGR; EBITDA margin based on 2020 results.
Source: FactSet, RBC Capital Markets estimates (LP Smartside only)

27 RBC Capital Markets

Appendix
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Further reading

Key Trends in US siding markets – Louisiana-Pacific:

Wood Products Primer, 10th Edition
Implications for LP and James Hardie Key takeaways from virtual investor day

Source: RBC Capital Markets

28 RBC Capital Markets

 Louisiana-Pacific Corporation

Louisiana-Pacific Corporation Fiscal 2018 2019 2020 Q121 Q221 Q321E Q421E 2021E 2022E 2023E
NYSE: LPX Calendar 31-Dec-18 31-Dec-19 31-Dec-20 31-Mar-21 30-Jun-21 30-Sep-21 31-Dec-21 31-Dec-21 31-Dec-22 31-Dec-23
KEY ASSUMPTIONS
SmartSide Volume Growth (Y/Y) % 7.4% 8.3% 13.0% 39.5% 27.3% 6.5% 6.5% 18.2% 15.0% 10.0%
OSB 7/16", North Central $ per msf $350 $209 $440 $835 $1,225 $700 $500 $815 $680 $438

SEGMENTED SALES
Siding $MM $942 $963 $959 $285 $291 $295 $291 $1,162 $1,387 $1,586
OSB $MM $1,305 $778 $1,220 $539 $778 $687 $365 $2,369 $1,636 $986
EWP $MM $391 $396 $389 $123 $158 $160 $153 $594 $582 $550
South America $MM $161 $159 $169 $53 $74 $61 $61 $250 $225 $204
Other $MM $29 $19 $52 $18 $26 $26 $26 $96 $104 $104
Total $MM $2,828 $2,314 $2,788 $1,017 $1,325 $1,229 $897 $4,468 $3,933 $3,431

SEGMENTED EBITDA
Siding $MM $235 $177 $246 $90 $77 $76 $85 $328 $440 $566
OSB $MM $455 $10 $519 $354 $565 $443 $137 $1,499 $767 $167
EWP $MM $35 $26 $23 $7 $18 $14 $12 $52 $64 $44
South America $MM $40 $34 $42 $7 $34 $20 $22 $84 $78 $57
Other $MM ($2) ($11) ($19) ($5) ($4) ($5) ($5) ($19) ($10) ($5)
Corporate $MM ($103) ($30) ($30) ($6) ($6) ($6) ($6) ($24) ($30) ($30)
Total $MM $660 $206 $781 $447 $684 $542 $245 $1,919 $1,308 $799

INCOME STATEMENT
Revenue $MM $2,828 $2,314 $2,788 $1,017 $1,325 $1,229 $897 $4,468 $3,933 $3,431
Cash cost of sales (ex. depreciation) $MM ($1,964) ($1,884) ($1,809) ($509) ($589) ($630) ($594) ($2,322) ($2,397) ($2,403)
Gross profit $MM $864 $430 $979 $508 $736 $599 $302 $2,146 $1,536 $1,027
Selling, general, & administrative $MM ($209) ($231) ($211) ($48) ($57) ($57) ($57) ($219) ($228) ($228)
Adjusted EBITDA $MM $660 $206 $781 $447 $684 $542 $245 $1,919 $1,308 $799
Depreciation and amortization $MM ($120) ($123) ($111) ($29) ($29) ($31) ($33) ($122) ($134) ($138)
Income from operations $MM $526 ($17) $636 $431 $653 $511 $212 $1,808 $1,174 $661
Interest expense $MM ($16) ($15) ($20) ($5) ($4) ($4) ($4) ($17) ($16) ($16)
Income before income taxes $MM $506 ($19) $621 $416 $644 $507 $208 $1,776 $1,158 $645
Provision for income taxes $MM ($122) $14 ($125) ($96) ($147) ($116) ($48) ($406) ($243) ($135)
Net income attributed to LP $MM $384 $0 $499 $320 $497 $392 $161 $1,369 $915 $510
Cash dividends per share $ per sh $0.52 $0.54 $0.57 $0.16 $0.16 $0.18 $0.18 $0.68 $0.76 $0.84
Adjusted earnings per share $ per sh $2.75 $0.37 $4.31 $3.01 $4.74 $4.00 $1.64 $13.38 $9.34 $5.20

CASH FLOW STATEMENT

Cash from operations $MM $508 $159 $659 $314 $457 $359 $320 $1,450 $1,071 $672
Capital expenditures $MM ($214) ($162) ($77) ($34) ($32) ($100) ($100) ($266) ($200) ($160)
Free cash flow $MM $260 $69 $595 $335 $505 $323 $94 $1,257 $849 $488

BALANCE SHEET
Net debt to Adjusted EBITDA X.X -0.8x 1.0x -0.2x -0.2x -0.1x -0.2x -0.3x -0.3x -1.1x -2.4x
Total debt to Adjusted EBITDA X.X 0.5x 1.8x 0.5x 0.3x 0.2x 0.2x 0.2x 0.2x 0.3x 0.5x
Net debt to capital % (21%) 11% (7%) (11%) (9%) (17%) (23%) (23%) (39%) (45%)

Source: Company reports, RBC Capital Markets estimates

September 8, 2021 Paul C. Quinn (604) 257-7048; paul.c.quinn@rbccm.com 29


Key ESG questions
This section is intended to highlight key ESG discussion points relevant to this company, as well as our views on the outlook. Both the questions
we highlight and our responses will evolve over time as the dialogue between management, analysts and investors continues to advance. We
welcome any feedback on the topics.
What are the most material ESG
issues facing this company?
Does the company integrate ESG
considerations into its strategy?
What is diversity like at the board/
management level?
September 8, 2021
Louisiana-Pacific Corporation
Our view
In our view, the most material ESG issues facing Louisiana-Pacific include:
Fiber Sourcing: Given the importance of utilizing sustainably sourced fiber, LP has
selected the Sustainable Forestry Initiative (“SFI”) to be its primary partner in forest
management certification. LP first became SFI certified in 2000, and 100% of its fiber
sourced in Canada and the US is certified to SFI standards. In Brazil and Chile, fiber
is managed to equivalent standards, with imports to North America eligible to use
the SFI label.
Greenhouse Gas Emissions: We view LP’s products as less carbon-intensive than
competing alternatives such as vinyl and fiber cement. The company utilizes state-
of-the-art emissions controls to meet or exceed all permitting requirements. 99.9%
of particulates are captured before they leave the stacks and a vast majority of water
is recycled.
Health & Safety: LP has achieved an annual total incident rate below 0.50 eight times
since 2010. In addition, LP has been honored with the APA’s Safest Company Award
in nine of the last ten years.
LP integrates ESG considerations into its strategy through its deeply rooted guiding
principle of “Do the Right Thing Always”. The company also maintains an ESG
executive council (CFO, CHRO, SVP Manufacturing Services, and SVP & General
Counsel) and an ESG Task Force (IR, Corporate Communications, Sustainability &
Policy, and Sales).
Twenty-five percent (2 of 8) of LP’s board of directors are female while 13% of the
company’s executive management roles are held by women. LP does not disclose
the number of visible minorities on its leadership team or board of directors.
Paul C. Quinn (604) 257-7048; paul.c.quinn@rbccm.com 30
 Louisiana-Pacific Corporation

Target/Upside/Downside Scenarios Investment summary

Louisiana-Pacific Corporation (“Louisiana-Pacific” or “LP”) is a
Louisiana-Pacific Corporation
leading provider of high-performance building solutions that
113 125 Weeks 18APR19 - 07SEP21 meet the demands of builders, remodelers, and homeowners
103
TARGET 100.00 worldwide. The company operates leading Siding, Oriented
93
83 Strand Board (“OSB”), and Engineered Wood Product (“EWP”)
73
businesses in North America, as well as a growing OSB
63 CURRENT 63.28
53 business in South America. LP also owns a controlling interest
43
33
in Entekra Holdings, LLC. We expect LP to benefit from its
23 growing Siding and South American businesses as well as
13
exposure to the growing US housing market through the OSB
30m
20m
and EWP segments.
10m

2019 2020 2021

AM J J A S O N D J F M A M J J A S O N D J F M A M J J A S
LPX US Rel. S&P 500 COMPOSITE MA 40 weeks
Source: Bloomberg and RBC Capital Markets estimates for Target
Valuation
Our $100 price target supports our Outperform rating and is
based on a blended 12.0x EV/EBITDA multiple of our trend
EBITDA estimate of $700 million (85%) and our 2022 EBITDA
estimate of $1,308 million (15%). We believe Louisiana-Pacific
should trade above the high end of the typical US Paper &
Forest Products trading range (6.0x to 8.0x), reflecting the
premium valuation of the Siding business, in addition to the
company’s strong balance sheet and accelerating return of
cash to shareholders.
Upside scenario
For our upside scenario of $125, we assume a blended
multiple of 15.0x.
Downside scenario
For our downside scenario of $30, we assume a blended
multiple of 3.5x.
We expect LP to outperform based on the company’s
continued growth in the US Siding market by adding new
capacity, the rollout of its pre-finishing strategy, and the
eventual re-rating to a multiple more reflective of the growth
and earnings power of the Siding business.
Over the next few years, we expect LP’s OSB and EWP
businesses to benefit from continued growth in the US
housing market, providing incremental free cash flow that
can be used to return capital to shareholders. The company’s
South America and Entekra business units provide additional
growth opportunities.
Risks to rating and price target
• Downward changes in the level of North American new
home construction and repair activity could adversely affect
results.
• Weaker economic conditions could have a negative impact
on demand for Louisiana-Pacific’s products.
• Economic cyclicality, changes in consumer preferences, or
imbalances in supply and demand could negatively affect
realized pricing.
• The shortage or increase in pricing of wood fiber or resin
would increase the cost of goods sold by LP, negatively
impacting results.
• Given that the company offers product warranties, realized
claims could be above management expectations, resulting
in additional charges.
• Increased competition in the North American siding market

September 8, 2021 Paul C. Quinn (604) 257-7048; paul.c.quinn@rbccm.com 31

 Louisiana-Pacific Corporation

Company description
Louisiana-Pacific Corporation (“Louisiana-Pacific” or “LP”) is a leading provider of high-performance building solutions. The
company manufactures siding, OSB, and engineered wood products for use in new home construction, repair & remodel, and
outdoor structure markets. The company is the second-largest producer of both siding and OSB in North America and the third-
largest producer of engineered wood products. LP also sells structural panel and siding products in South America.

Required disclosures
Non-U.S. analyst disclosure
One or more research analysts involved in the preparation of this report (i) may not be registered/qualified as research analysts
with the NYSE and/or FINRA and (ii) may not be associated persons of the RBC Capital Markets, LLC and therefore may not be
subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities
held by a research analyst account.

Conflicts disclosures
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including
total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated
by investment banking activities of the member companies of RBC Capital Markets and its affiliates.
Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in,
this report. To access current conflicts disclosures, clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/
DisclosureLookup.aspx?entityId=1 or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza,
29th Floor, South Tower, Toronto, Ontario M5J 2W7.

A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities for
Louisiana-Pacific Corporation in the past 12 months.
A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services from
Louisiana-Pacific Corporation in the past 12 months.
RBC Capital Markets, LLC makes a market in the securities of Louisiana-Pacific Corporation.
A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other than
investment banking services from Louisiana-Pacific Corporation during the past 12 months. During this time, a member company
of RBC Capital Markets or one of its affiliates provided non-securities services to Louisiana-Pacific Corporation.
RBC Capital Markets has provided Louisiana-Pacific Corporation with investment banking services in the past 12 months.
RBC Capital Markets has provided Louisiana-Pacific Corporation with non-securities services in the past 12 months.

Explanation of RBC Capital Markets Equity rating system

An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned
to a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the
analyst's sector average.
Ratings
Outperform (O): Expected to materially outperform sector average over 12 months.
Sector Perform (SP): Returns expected to be in line with sector average over 12 months.
Underperform (U): Returns expected to be materially below sector average over 12 months.
Restricted (R): RBC policy precludes certain types of communications, including an investment recommendation, when RBC is
acting as an advisor in certain merger or other strategic transactions and in certain other circumstances.
Not Rated (NR): The rating, price targets and estimates have been removed due to applicable legal, regulatory or policy constraints
which may include when RBC Capital Markets is acting in an advisory capacity involving the company.
As of March 31, 2020, RBC Capital Markets discontinued its Top Pick rating. Top Pick rated securities represented an analysts best
idea in the sector; expected to provide significant absolute returns over 12 months with a favorable risk-reward ratio. Top Pick

September 8, 2021 Paul C. Quinn (604) 257-7048; paul.c.quinn@rbccm.com 32

 Louisiana-Pacific Corporation

rated securities have been reassigned to our Outperform rated securities category, which are securities expected to materially
outperform sector average over 12 months.
Risk Rating
The Speculative risk rating reflects a security's lower level of financial or operating predictability, illiquid share trading volumes,
high balance sheet leverage, or limited operating history that result in a higher expectation of financial and/or stock price volatility.

Distribution of ratings
For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories -
Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Outperform (O),
Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are
not the same because our ratings are determined on a relative basis.
Distribution of ratings
RBC Capital Markets, Equity Research
As of 30-Jun-2021
Investment Banking
Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [Outperform] 787 55.70 318 40.41
HOLD [Sector Perform] 575 40.69 173 30.09
SELL [Underperform] 51 3.61 4 7.84

Rating and price target history for: Louisiana-Pacific Corporation, LPX US as of 07-Sep-2021 (in USD)
22-Oct-2018 08-Jan-2019 13-Feb-2019 07-May-2019 06-Aug-2019 06-Nov-2019 14-Jan-2020 11-Feb-2020 17-Mar-2020 31-Mar-2020 16-Apr-2020 08-Jun-2020 09-Jul-2020
Rtg:TP Rtg:TP Rtg:TP Rtg:TP Rtg:TP Rtg:TP Rtg:TP Rtg:TP Rtg:TP Rtg:O Rtg:O Rtg:O Rtg:O
Target: 33.00 Target: 28.00 Target: 33.00 Target: 32.00 Target: 30.00 Target: 35.00 Target: 38.00 Target: 42.00 Target: 30.00 Target: 30.00 Target: 27.00 Target: 32.00 Target: 34.00

80
70
60
50
40
30
20
10
Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3
04-Aug-2020 18-Aug-2020 22-Dec-2020 17-Feb-2021 01-Apr-2021 04-May-2021
Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O
Target: 38.00 Target: 42.00 Target: 50.00 Target: 58.00 Target: 70.00 Target: 100.00

Legend:
TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; R: Restricted; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage;
NR: Not Rated; NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date
a security was removed from a recommended list; Rtg: Rating.
Created by: BlueMatrix

References to a Recommended List in the recommendation history chart may include one or more recommended lists or model
portfolios maintained by RBC Wealth Management or one of its affiliates. RBC Wealth Management recommended lists include
the Guided Portfolio: Prime Income (RL 6), the Guided Portfolio: Dividend Growth (RL 8), the Guided Portfolio: ADR (RL 10),
and the Guided Portfolio: All Cap Growth (RL 12). RBC Capital Markets recommended lists include the Strategy Focus List and
the Fundamental Equity Weightings (FEW) portfolios. The abbreviation 'RL On' means the date a security was placed on a
Recommended List. The abbreviation 'RL Off' means the date a security was removed from a Recommended List.

Equity valuation and risks

September 8, 2021 Paul C. Quinn (604) 257-7048; paul.c.quinn@rbccm.com 33

 Louisiana-Pacific Corporation

For valuation methods used to determine, and risks that may impede achievement of, price targets for covered companies, please
see the most recent company-specific research report at www.rbcinsight.com or send a request to RBC Capital Markets Research
Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.
Louisiana-Pacific Corporation
Valuation
Our $100 price target supports our Outperform rating and is based on a blended 12.0x EV/EBITDA multiple of our trend EBITDA
estimate of $700 million (85%) and our 2022 EBITDA estimate of $1,308 million (15%). We believe Louisiana-Pacific should trade
above the high end of the typical US Paper & Forest Products trading range (6.0x to 8.0x), reflecting the premium valuation of the
Siding business, in addition to the company’s strong balance sheet and accelerating return of cash to shareholders.

Risks to rating and price target

• Downward changes in the level of North American new home construction and repair activity could adversely affect results.
• Weaker economic conditions could have a negative impact on demand for Louisiana-Pacific’s products.
• Economic cyclicality, changes in consumer preferences, or imbalances in supply and demand could negatively affect realized
pricing.
• The shortage or increase in pricing of wood fiber or resin would increase the cost of goods sold by LP, negatively impacting results.
• Given that the company offers product warranties, realized claims could be above management expectations, resulting in
additional charges.
• Increased competition in the North American siding market

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RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request.
To access our current policy, clients should refer to
https://www.rbccm.com/global/file-414164.pdf
or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South
Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

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The 12 month history of SPARCs can be viewed at RBC Insight.

Analyst certification
September 8, 2021 Paul C. Quinn (604) 257-7048; paul.c.quinn@rbccm.com 34
 Louisiana-Pacific Corporation

All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of
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 Louisiana-Pacific Corporation

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