Norbord, Inc. (NYSE:OSB) Q3 2019 Earnings Conference Call - Final Transcript

Oct 31, 2019 • 11:00 am ET

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Norbord, Inc. (NYSE:OSB) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to Norbord Inc.'s Third Quarter Earnings Conference Call. As a reminder, today's call is being recorded and webcast on Norbord's website at www.norbord.com.

Norbord's discussion today may include certain projections and forward-looking statements regarding Norbord's business, future actions and expected results. These statements are subject to known and unknown risks and future results may differ materially. For future information on known risks, please see the caution regarding forward-looking information statement on Norbord's January 31st, 2019 annual information form and the cautionary statement contained in the forward-looking statements section of Norbord's Management Discussion & Analysis dated October 30th, 2019.

And now, I will turn the call over to Peter Wijnbergen President and Chief Executive Officer. Please go ahead, sir.

Executive
Peter C. Wijnbergen

Well, thank you, Ryan, and good morning everyone. Welcome to our Q3, 2019 Conference Call. I'm joined today by Robin Lampard, our CFO; Heather Colpitts, our Director of Corporate Affairs; and Robert Winslow, a recent addition to the team and our Vice President of Investor Relations and Corporate Development.

This morning, I will briefly summarize a few points about our Q3 results and our outlook before we take your questions. Favorable US housing market fundamentals continue to be slow to translate into stronger OSB demand. Our mills run well again in Q3. However, our financial results were disappointing as effects of the US housing market softness that began late last year continue to weigh on OSB markets in the quarter.

Benchmark prices were mixed in the third quarter. North Central and Western Canadian average regional prices were higher quarter-over-quarter, but still materially below year ago levels, while Southeast prices weakened to multi-year lows.

For the fourth consecutive quarter, we took extensive downtime across our North American mills; 70 mill days in Q3 to ensure we only produce what we could sell. However, despite this significant downtime, we were able to lower our North American unit cost 4% quarter-over-quarter by operating more efficiently.

As you know, we idled our 100 Mile House mill in British Columbia in August. And earlier this month, we announced that we will idle Line 1 at our Cordele, Georgia mill starting mid-November. Together, this indefinitely curtail 12% of our available North American capacity. These were difficult but necessary decisions that reflect the economic realities facing our business.

We have experienced hardworking teams in both mills and these decisions were in no way a reflection of the quality and capability of our employees. I'd like to thank our mill employees for all their efforts and commitment. We will continue to serve our customers, without disruption, from our other operating OSB mills in North America, including our two Alberta mills and our second line of Cordele.

Looking forward, we have seen improvement in the affordability concerns and persistent record-breaking wet weather that led to poor building conditions in many North American regions over the past year. The buildup of US unsold new home inventory now appears to have been absorbed and new home sales increased through