Norbord, Inc. (NYSE:OSB) Q1 2019 Earnings Conference Call - Final Transcript
May 02, 2019 • 02:00 pm ET
Good day, and welcome to the Norbord First Quarter Earnings Conference call. As a reminder, today's call is being recorded and webcast on Norbord's website at www.norbord.com. Norbord discussion, today may include certain projections and forward-looking statements regarding Norbord business future actions and expected results. These statements are subject to known and unknown risks and future results may differ materially.
For further information on risks known and unknown, please see the caution regarding forward-looking information statement and Norbord's January 31, 2019, Annual Information Form and the cautionary statements contained in the forward-looking statements section of Norbord management discussion and analysis dated May 1, 2019. Now, I'd like to turn the call over to Peter Wijnbergen. Sir, please go ahead.
Peter C. Wijnbergen
Thank you, Katie,and good afternoon everyone. Welcome to the call. I'm joined today by Robin Lampard, our CFO;and Heather Colpitts our Senior Manager of Corporate Affairs. We held our AGM this morning, so hopefully most of you had a chance to listen in on my presentation, if not a replay is available on our website. I want to take a moment to summarize a few points about our Q1 results and outlook before we take your questions.
First quarter results are disappointing. The US housing market pull back that began in the second half of last year continued relative to the first quarter of 2019. And as you know, Q4 and Q1 are always the seasonally slowest time of the year. This quarter has further exacerbated by persistent poor building weather in many of our American operating regions. This held back or the results and as a result benchmark prices were down further 13% in Q4 to their lowest levels since 2015.
Further, we took a 77 mill days of downtime to ensure we only produce what we could shelve, which translated into lower volumes and higher manufacturing costs. All of this negatively impacted our Q1 financials resulting in adjusted EBITDA of $42 million. Our view is that housing -- this housing pullback is a pause, rather than a directional shift. Fundamentals underlying the housing market remained positive and conditions are slowly improving both seasonally and due to improving affordability. And our most benchmark OSB price have been declining are bouncing along the bottom for the past three quarters. You may have seen that, Tuesday night's Random Lengths reports did finally show some upward movement in both the North Central and Western Canadian regions.
In Europe, the picture has been far more positive. Our European adjusted EBITDA increased 17% year-over-year to $21 million. European OSB demand remains strong, and the second phase of investment in Inverness is now underway and will help us continue to serve growing customer demand for years to come. Our European business is poised for another good year.
And with that, we'll jump right into questions. So, I'll turn things over to the operator, who will open up your lines.