Louisiana-Pacific Corporation (LPX) Earnings Call Transcript & Summary

Hello and welcome to the LPX 2020 Investor Please welcome Aaron Howald. Aaron, the floor is yours?

Good morning, everyone, and welcome to LP Building Solutions 2020 Virtual Investor Day. My name is Aaron Howald, and I am LP's Director of Investor Relations. We had hoped to do this earlier in the year and in person, but of course, that became impossible with COVID-19. Speaking of which, we are assembled here in our headquarter in Nashville -- in our Nashville headquarters. We are appropriately distanced and taking all prudent precautions. We hope that you and your families are safe and that we can go back to meeting in person soon. Before we dive into the content, I will briefly discuss the format of today's meeting. Today's meeting will be a series of presentations, most followed by question-and-answer sessions. We can take questions either via audio or text. So please follow the instructions in your interface as appropriate for the mode of the questions. We'll answer as many questions as possible and try to make this as interactive as we can. The entire presentation will be recorded and archived and available on our Investor Relations web page soon after the presentation. Here's our agenda for the morning. We will start with a general strategy update from LP Chairman and CEO, Brad Southern. Followed by a general overview of our products, pricing and other jargon, for those less familiar with LP in our industry. Next, we will hear from Nicole Daniel, Senior Vice President and General Counsel, who will introduce our governance and responsibility framework. We will then transition to discussions about our business segments, led first by Neil Sherman, EVP and General Manager of Siding; followed by Jason Ringblom, EVP and General Manager of OSB. And then Frederick Price, who's President and General Manager of LP South America, who will be joining us from Santiago, Chile to discuss our South American business. Fred will discuss Entekra, and then we will conclude today's presentation for the financial review, led by Alan Haughie, our Chief Financial Officer. Let me remind everyone on the call about forward-looking statements and the use of non-GAAP financial metrics in the course of today's presentation. Rather than reading these statements, I incorporate them herein by reference. I also refer you to our 8-K filing out this morning for reconciliations of non-GAAP metrics. These presentations and indices will be available in PDF form later today and the entire reported webinar will be archived within about 24 hours or so. Both -- and all of that will be available on our Investor Relations web page, www.investor.lpcorp.com. And with that, I thank you, again, for joining us, and I will turn the call over to Brad Southern.

Thanks, Aaron, and good morning, everyone. Thank you for joining us today, and welcome, again, to LP Building Solutions 2020 Investor Day. My name is Brad Southern, and I am LP's Chairman and CEO. I've been CEO for a little over 3 years, and I've been with LP for over 20 years. Glad you could join us this morning for an update on our strategy or introduction to the broader team that is implementing this strategy. As Aaron mentioned today, you'll hear from Neil, Jason, Frederick and Nicole, they will dive deeper into our operations after a brief introduction of industry terms, our products and pricing dynamics for those on the call who may be less familiar with LP and the markets we serve. We will wrap up with Alan Haughie, our CFO, with a discussion of LP's financial strength and capital allocation strategy. Before I turn the call over to the broader executive team, I will talk a bit about LP and our strategy. LP was founded in 1973. We are a leading producer of strand-based engineered wood building products for residential and light commercial construction as well as repair and remodel. Our primary raw material is wood fiber, so we are committed to responsibly and sustainably harvesting that renewable resource as well as using it as efficiently as possible in our manufacturing process. Nicole will speak in detail about our ongoing sustainability programs, our framework for ESG governance and our approach to social responsibility as it relates to communities we serve and our 4,800 employees. LP is a leader in the markets we serve. In Siding, we are the only manufacturer of strand-based engineered wood siding. We have consistently grown Siding sales above the market growth rates and housing starts and repair and remodel expenditures. And we have a long runway of growth ahead of us. We expand the addressable markets and our penetration within. In OSB, we have approximately 16% market share in terms of total capacity and we are a leading producer of a wide range of value-added OSB products. In South America, we are a large manufacturer in a growing market, producing OSB, Siding and I-Joist. We are instrumental in changing the way homes are built in [indiscernible] and other South American countries, transitioning from masonry to more sustainable wood construction, just as we did in North America, driving the substitution of OSB and fiber. While our South America operations are changing products used in homebuilding, our investment in Entekra which is a disruptive innovation in off-site framing shows that we are, once again, evolving the homebuilding process in North America. This slide shows the breakdown of sales revenue by segment for the trailing 12 months as well as the breakdown of strand capacity by segment. As you can see from these charts, Siding business punches well above its weight for revenue generation per unit of capacity. We are leader in the markets we serve, and help resolve problems for our customers. We hear from our customers and I am sure many of you hear from homebuilders, the construction labor availability is constraining home building and remodeling. Many of LP's products combine multiple elements to a single system. For example, ExpertFinish, a great finish SmartSide is delivering with a beautiful and durable factory paint [indiscernible] already applied. This saves the costs and time of painting prime siding effort after installation. WeatherLogic sheeting combines an OSB panel with weather resistant barrier, eliminating the need to install housewrap. FlameBlock combines fire resistance with structural integrity, simplifying the job of designing and constructing party walls and other applications requiring both features. Entekra applies the same philosophy to the printing process itself, dramatically improving job site efficiency for both labor and materials, shortening the build cycle and improving build quality. When I speak specifically about Entekra later this morning, I will show you a video of an Entekra build process that highlights the potential of this technology. A consistent theme across our Siding, OSB and Entekra portfolio group is that we develop innovative products that create value for our customers by helping them address critical constraints in building cycle like labor. When I was named CEO in 2017, I worked with our Board of Directors to develop an aspiration. This aspiration is to build a company that consistently and sustainably delivers top-tier shareholder return performance. That aspiration led to our business strategy to transform LP and the market's perception of LP from a commodity-based forest products company, to a specialty building products company. This strategy has 4 pillars which I'll briefly summarize. You will hear more detail on the leaders accountable for delivering on these goals later today. The first pillar of our strategy is growing sales volume, revenue and margin for the Siding business, for Structural Solutions and for LP South America. The Siding segment has grown significantly faster than the underlying markets it serves. With a compound annual growth rate exceeding 10%, this growth rate has been achieved through investments in increasing our brand awareness and market presence. The second pillar is innovating new products and processes. 2 years ago, SmartSide was available only with an embossed cedar-grain pattern and only as primer, which required painting after installation. This limited our reach and geographies that prefer the smooth siding esthetic and added the time and expense of painting for repair and remodel projects. Now SmartSide is available with the smooth finish in addition to the existing cedar-grain pattern is available pre-finished post prime significantly increasing LP's addressable market. In OSB, innovated products like legacy flooring and WeatherLogic sheathing increased margin and decreased volatility. Neil and Jason will in share much more detail later, but suffice it to say, we have many years of runway ahead of us for growth and market penetration. The third pillar of our transformation is operational excellence. As measured in Overall Equipment Effectiveness, or OEE. In the OSB segment, we are managing capacity with significantly improved discipline and a relentless focus on efficiency and cost control. Under Jason's leadership, the OSB segment is working to transcend the boom and bust cycles in the past. This work showed its value last year. With OSB prices at cycle lows, the OSB segment achieved a breakeven EBITDA. The last time OSB prices hit cycle lows was 2015. In that year with a very different approach to balancing supply and demand, the OSB segment had an EBITDA of negative $21 million. Prices will continue to be volatile, but the work our OSB business is doing has significantly reduced the volatility of segment's earnings. Jason will give you more detail about the OSB business later this morning. The fourth pillar of LP's strategic transformation is our shareholder focused capital allocation strategy. We plan to return half of the cash we generate after necessary investments to shareholders through a combination of dividends and share buybacks. This is possible, in part, because the SmartSide business is now large enough to reliably fund both LP's dividend and its own capital expansion. Early in the COVID-19 pandemic, we announced that we had no plans to act on our existing $200 million share buyback authorization. As we all know, the housing sector has been remarkably resilient in the face of this crisis and LP has generated significant more cash so far in 2020 than we expected in late March. As a result, we have resumed buying back our shares. Alan will include more details of the resumption of share repurchases in the concluding session of today's presentation. We will also continue to seek targeted opportunities to invest in acquisitions that drive our growth strategies, such as Entekra and the 2 pre-finished facilities we acquired in 2019. One reasonable question about this strategy is whether it depends on a bullish housing outlook to be successful. My answer to that question is no because the Siding segment has demonstrated for many years consistent growth above the growth rates of housing and repair/remodel spending. And the OSB segment has demonstrated cost control far beyond what would be expected with higher utilization rates and better cost absorption. LP's strategy is absolutely not predicated on a bullish housing market. But I should add that I am very bullish on housing for the next several years and I believe you should be too for 2 very important reasons. First, this chart shows 30 years of U.S. housing starts data as reported by the U.S. Census Bureau shown on a trailing 12-month basis. The 30-year average annual number of total U.S. housing starts, 1.3 million. Assuming the 1.3 million average accurately represents housing demand, the question is whether the housing market is over or undersupplied? And over what time line? In the start in 2010, U.S. housing markets under build by a combined 3 million starts compared to the low run average of 1.3 million. But even if you go back 20 years, well before the housing boon and financial crisis, we were still under build at almost 1 million homes. And remember, over the time scale of this graph, the U.S. population has increased by 8 million people. Different assumptions and approaches will yield given levels of undersupply, but it is difficult to argue that housing was overbuild by [indiscernible]. Second and more important, let's take a quick look at demographic data. This chart shows the age structure of the U.S. population by 5-year age cohort. These cohorts can change slightly for a variety of reasons, but the relative sizes of the age cohorts are likely to stay fairly stable. The median first-time home buyer, according to the National Association of Realtors, is 32 years old. According to the age structure data, the 30- to 34-year-old age cohort is going to grow its size significantly over the next 5 years. This will likely drive new construction of homes for the first-time buyer. However, while the median time -- home -- median first time homebuilder is 32 years old, the median homebuyer overall is 46 years old. This census data indicates that the population of people in this age range is going to shrink slightly then grow steadily for 15 years. The number of housing starts in any given single year is hard to predict. However, given the structural undersupply of housing and very favorable long-term demographic trends, it seems very likely that more homes will be built in the next few years that were built in the last. While LP's strategy is not predicated on this being the case, it certainly positions us well till housing starts return to their historic -- historical average and resolve the current undersupply. And with that, I will turn the presentation back over to Aaron for a brief introduction to important terminology and units of measure as well as an overview of the very different pricing dynamics for our products. We will try to keep our presentation as jargon free as possible, but we hope the following introduction is useful for new or potential investors who may not be as familiar with our products or the markets we serve.

Thanks, Brad. This is Aaron Howald again. And as Brad said, this next section is designed to introduce and define terms and concepts that may be less familiar to newer investors. The upcoming sections will contain some jargon, so in the interest of clarity, we want to mention these concepts briefly first. First of all, all of LP's SmartSide and OSB products are made with similar strand technology. In the manufacturing process, logs are cut into strands immediately after the bark is removed. The geometry of these strands can be fine-tuned to create different product characteristics. But in general, they are about the thickness of a business card and range in size up to about $1 bill. The name Oriented Strand Board refers to the process that aligns the strands in alternating perpendicular layers to maximize the board's strength and durability. Our products are made from southern yellow pine in the south and aspen in the north, with small amounts of alternate [indiscernible]. OSB can be made from either wood species, but SmartSide is made exclusively of aspen. As Nicole will describe in more detail in a moment, all of our fiber is sustainably and responsibly harvested with replanting the natural regeneration as appropriate for the species and location. Other than wood, which is by far the largest input by volume, other raw materials include various adhesives, resins, waxes overlays and chemical treatments. At previous investor days, we have offered mill tours to familiarize you with the manufacturing process. That is obviously impossible now, but we do have a free video to show the manufacturing process, which we will show now. [Presentation]

Okay. You saw some of the product applications in that video. But briefly, LP SmartSide is an exterior cladding product available in panels, flat, trim, soffit and various accessories. It is used in new residential and commercial construction, repair and remodel applications and outdoor buildings like sheds. SmartSide competes against cladding alternatives such as vinyl, solid wood, fiber cement, stucco and brick. Neil will talk in much more detail about addressable markets later this morning. By contrast with SmartSide, Oriented Strand Board is a structural product, rarely visible inside or outside the home once construction is complete. Available exclusively as panels in various sizes, applications include wall sheeting, roof decks and sub-floors. And while most of LP's OSB is used in new residential construction and R & R, some product finds its way into industrial applications as raw material inputs for I-Joist, furniture and specialty packaging. For those not familiar with OSB and Siding units of measure, discussions of volumes and prices can be confusing. When we talk about volume of production or sales, we speak in terms of thousands of square feet, abbreviated MSF, on a standard 3/8 inch thickness basis. This allows for a common basis of comparison for discussing production rates, cost of production, margins, et cetera. Prices are generally quoted on a surface basis, meaning the actual surface area of the pieces of the product regardless of their thickness. So for example, if the price of [ 23/32] inch thick commodity sub flooring is quoted as $800 a 1,000. That means $800 per 1,000 square feet of surface area. And 1,000 square feet of surface area of [ 23/32 ] subfloor is about 1,900 square feet on a nominal 3/8 basis. In South America, production and sales volumes are described in cubic meters. 1 cubic meter is about 1,100 square feet on a 3/8 basis. In terms of capacity, again, on a 3/8 basis, the Siding business has roughly 1.7 billion square feet of annual capacity. The OSB business has 4.5 billion square feet, 800 of which is Peace Valley, which is currently idled. With Siding products like lap, trim and soffit, length matters, too. SmartSide is durable enough to be available in 16-foot lengths, whereas fiber cement is generally available only in 12-foot lengths. This allows for significantly fewer gaps and more efficient installation, as Neil will discuss in a bit. Siding and OSB are priced very differently. LP publishes price lists annually for Siding. We have been able to increase net prices at a consistent 3% to 4% compound annual rate. Small quarterly price fluctuations in the Siding business are the result of regional and product mix variations, not price variations at the SKU level. Siding prices are very stable and neither their prices nor costs are in any way linked to commodity OSB prices. By contrast, with the stability of SmartSide prices, commodity OSB prices fluctuate constantly with updates published weekly by Random Lengths, which is an independent entity that publishes prices for plywood, lumber and many other commodity building products. LP's Structural Solutions portfolio of value-added OSB products is priced at the commodity price for the substrate, plus a fixed up charge, we call an adder. For example, TechShield, which is our well-known radiant barrier sheeting is priced at the Random Lengths commodity sheeting price for its given thickness plus a fixed adder. The substrate prices change weekly, but the adders for Structural Solutions products are comparatively stable. In fact, the highest value-add OSB products like FlameBlock, which is our fire-rated sheeting, are priced more like Siding with quarterly price lists. As Jason will discuss in more detail, Structural Solutions products add value for builders because they combine features that provide a complete system, which saves time and labor during the construction process. Within LP's OSB volume, roughly 2/3 is sold at contracted volumes, with the remaining 1/3 sold on the open market. Contract volume is priced algorithmically, generally with the current week's contract volume priced at the previous Friday's Random Lengths print. Open market OSB is sold at negotiated prices on LP's trading floor. Jason will give you more detail on this, but LP tries to keep a relatively short order file of 2 to 3 weeks, meaning that open market volumes sold this week will be delivered 2 to 3 weeks from now. On the table at the left of the slide is a picture of a Random Lengths report from 2 weeks ago. The graph below is weekly priced data since 2008. Each week, Random Lengths aggregates open market price data reported by large producers and consumers. Then every Friday, Random Lengths publishes updated prices for 4 different thicknesses of sheathing and 2 different thicknesses of commodity subfloors, each priced in 6 regions and several delivered zones. If buyers and sellers report prices consistently above or below the previous Friday's levels, prices tend to change accordingly. If prices are stable or sometimes if order files and availability results in very little open market volume, prices tend to stay flat. The duration of orders files and the algorithmic nature of contract volume can create a time lag between published prices and our realization, particularly when prices rise or fall rapidly. I hope this was helpful to those less familiar with the specific jargon and dynamics of our industry. In the next section, Nicole Daniel, will discuss LP's governance and corporate responsibility framework, after which we will have a general Q&A session, followed by a short break. After that, we will resume the presentations of the business segments, starting with Neil Sherman, who will discuss the Siding business.

Good morning. My name is Nicole Daniel, and I'm the Senior Vice President, General Counsel and Corporate Secretary at LP. I'm also the executive team sponsor for our new ESG Executive Counsel. Although we've not broadly shared specified targeted metrics around ESG in the last few years, today, we would like to share with you information about what we are doing to help drive sustainability and corporate responsibility at LP. One of our core values is do the right thing always. This deep-rooted cultural norm drives decisions we make and actions we take every day. It also describes how we think about the processes we follow as we source wood for our products or work to minimize waste. It describes how we get back to our communities or seek to proactively identify safety hazards to keep our employees safe. Doing the right thing always will, in our opinion, drive shareholder value because it helps us be a sustainable company. The initiatives I'm going to talk about this morning are not new to LP, we have been doing all of this for years. What is new, however, is the focus that we are bringing to these efforts by consolidating them under a new framework. Earlier this year, we reconfigured one of our Board committees to provide a specific governance framework for our ESG efforts. This committee is chartered to help manage risks and opportunities around sustainability, the environment, safety and human capital as well as the overall governance of our company. To implement the strategy and communicate results to a broad range of stakeholders, we created an ESG executive counsel, comprising our Chief Financial Officer, our Chief Human Resources Officer, our Senior Vice President of Manufacturing Services, and me, as our Chief Legal Officer. We have also named an ESG task force accountable for these programs, comprising the heads of Investor Relations, Corporate Communications, Sustainability and Policy and Sales and Marketing. This structure will provide a renewed governance framework that can take our efforts to the next level and ensure that they are materially linked to shareholder value. I'd like to begin by talking about LP's responsible stewardship of the natural resources we use in the manufacturing of our products. Sustainability requires careful harvesting of our forest resources and efficient utilization of those resources in our manufacturing process. We utilize millions of tons of logs a year in such a way that ensures the long-term viability of forests. 100% of the logs used by LP in the manufacture of our products are sustainably harvested. In North America, our forestry operations are certified to the Sustainable Forestry Initiative standard. While the certification systems differ in South America, 100% of the logs used at our facilities there are also responsibly harvested from legal noncontroversial sources. These logs come from a mix of public and private lands. In the U.S., about 85% of the logs we harvest are from private lands. While in Canada, they are predominantly from public lands. In all cases, those trees that are harvested are either replanted or steps are taken to optimize natural regeneration as appropriate for the species and area harvested. I had no idea before I came to LP that the aspen tree, which we used to manufacture our Siding product, is actually a colony rather than a series of individual plants. The active harvesting of aspen stimulates the root systems to spontaneously regenerate new growth. We harvest trees to ensure a healthy and sustainable forest, and we make sure that we do so in a way that minimizes impact, promotes conservation of wildlife habitat and protects water resources. It might not be easy to see, but this picture on the top left area, on the top left of the slide, is an area that has been harvested. Far from the clear-cut stereotype, this shows that the harvesting practices preserve natural boundaries in the forest perimeter, protected wetlands, created travel corridors for wildlife and left many mature tree standing. Wherever we source our wood fiber, we engage with our local stakeholders, First Nations and conservation organizations. We have partnered in the U.S. with the National Wild Turkey Federation and Ducks Unlimited Canada to promote habitat preservation and healthy ecosystem. As a recent example, this year, we announced the signing of a new 10-year agreement with Ducks Unlimited Canada. It will positively impact more than 6 million acres of Manitoba's Boreal Forest, an area larger than the state of Vermont and half the size of Nova Scotia. This partnership with Ducks Unlimited Canada began nearly 20 years ago as we worked to inventory millions of acres of waterfowl supporting habitat in the Manitoba area, which is an essential step for wetlands and waterfowl conservation. The next step in the sustainability of our resources is ensuring that we utilize those resources efficiently to minimize both cost and waste. Our processes allow us to use more than 99% of the logs that come into our facilities. The parts we don't use to create products are used to help power our facilities. We burn bark and wood [ volume ] biomass to create heat for drying and to heat the thermal oil in our presses. Majority of the thermal energy we use comes from the biomass, significantly offsetting fossil fuel usage. Where possible, we utilize the ashes generated as clean and natural fertilizer on local farm fields. We are extremely proud of these low waste processes our Siding and OSB facilities are implementing. Burning biomass and pressing wooden resins under high heat produces particulates and other gaseous emissions. But our state-of-the-art emissions control capture 99.9% of the particulates before they leave the stacks. Most of what leaves our stacks is actually water vapor released in the process of drawing the flakes. We also use relatively little water compared to other manufacturing processes, but almost all the water we do use is recycled through our systems. Next, I want to talk about our people, both in terms of our immediate safety and more generally in terms of our general well-being. At LP, we have made enormous progress in our safety journey. We have won the APA's Safest Company award 9 times in the past 10 years, but good is not good enough. And so we have recently redirected our safety focus away from incident management towards forward-looking injury prevention. LP is now working to identify areas of risk, using our framework known as serious injury and fatality prevention, which we refer to as SIF Prevention. We believe by recognizing risks in our operations, we can help to prevent future injuries. This year, in addition to our normal focus on injury prevention, COVID-19 presented us with a new safety challenge. I'm very happy to report that so far, we've had very few COVID-19 infections and thankfully, no COVID fatalities among our LP employees. The precautions we have instituted in our manufacturing and office facilities have minimized transmission, and we've had no production interruptions caused by outbreak. We will maintain our vigilance as long as the threat remains and we will continue to do everything we can to keep our employees safe. Beyond immediate physical safety, we also have multiple initiatives designed to improve the well-being of our employees. Some of these programs include the employee assistance program, which offers free and anonymous counseling, a scholarship and tuition assistance program for employees and their families and our commitment to diversity and inclusion at LP. Diversity, inclusion and acceptance of our differences are more than just words for us. They are central to our values. Our code of conduct requires us to treat each other, our suppliers and customers, our neighbors and all members of the LP community with respect. It bounds us to be firmly committed to equitable treatment for all. We believe expanding the lens through which we see the world is critical. As an executive team and a company, we recently participated in a racial equity and social justice challenge, which provided daily content on issues of race, power, privilege and leadership. We are committed to ongoing education, awareness and practices to ensure we always operate within the ideals of fairness, mutual respect and equality. We will always strive to do better to implement better practices for our employees and communities and to hold ourselves to the highest standard. We also have a program called LP Cares, which is a fund designed to help employees impacted by natural disasters or other emergencies. I could tell you more about this, but I think we would rather hear it from [Shannon Carr]. [Shannon] is an operator at our Wilmington, North Carolina plant. In 2018, Hurricane Florence hit Wilmington, North Carolina doing significant damage to the plant and our surrounding community. The clip you are about to see was filmed several months ago as part of a longer video about LP Cares for a leadership meeting in February, and [Shannon] allowed us to repurpose our message to share with you today. Please play the video. [Presentation]

Here are just 3 of the 65 children of our employees who received academic scholarships totaling $95,000 this year. COVID made 2020 an odd year to graduate from high school and head off to college, but we hope that this scholarship program helps make that transition a little less stressful. Finally, I want to mention LP's involvement in our broader communities. LP seeks to make a positive impact in our communities in many ways, including corporate philanthropy through our LP Foundation, mill community grants, disaster relief and volunteerism. Whether it's building homes with Habitat for Humanity, planting trees, raising funds for local schools, preparing for and cleaning up after storms and other natural disasters or community grants, LP employees take do the right thing always to heart. To conclude, I'd like to share a video clip that sums up much of who we are. Thank you, again, for your time today. Play the video, please. [Presentation]

Okay. With that, we are at our first Q&A session. We are going to defer specific questions about Q3 until later on. And to keep this focus, we'll take any questions about any of the sessions that we've just had. And then we will take a short break before we resume the business-specific sections. So at this point, you can communicate your questions about either our general strategy or ESG or any of the other items that we discussed so far, either via audio or text. I do see one text question, but it's OSB specific. So I'm going to suggest that we hold that until Jason speaks in a bit. So Kurt, we'll get to that. Well, it doesn't look like we have any questions at this point. So either that means we did a fantastic job of explaining everything or ready for a break. In any event, we'll take about 5 or 6 minutes. Call it 5 and then we will resume. So I have 8:42. We'll resume at 8:48 and we'll rejoin you soon. [Break]

Okay. Welcome back, everyone. We will resume the 2020 LP Virtual Investor Day. And up next is Neil Sherman, EVP and GM of the Siding business.

Good morning, everyone, and thank you for attending our call. I'm pleased to be here today to talk to you about LP Siding business. As referenced earlier, my name is Neil Sherman, and I'm the EVP and General Manager of LP Siding segment. I joined LP in 1994 and have been in this role for almost 4 years. I'm excited to tell you about how we're expanding our addressable markets and innovating new products to drive growth. I'll first walk you through a history of our growth story and showcase our innovative products, some of which have helped expand our addressable markets. I'll also define what we see as our currently addressable markets and demonstrate the long runway we have for growth. Then we will review the primary market segments we participate in, in our geographic sales profile. I'll close with an overview of our manufacturing footprints, discuss timing and options for our next capacity expansion and the long runway of further expansion opportunities ahead of us to supply future growth. Then we'll take your questions. From 2015 to 2020, Siding revenue has grown at a CAGR of 12%. On a trailing 12-month basis, volume and price have contributed to this growth at a ratio of 4:1. Although in any given quarter, that ratio can fluctuate. EBITDA over that 5-year period has a CAGR of 19%. You will see on this slide that capacity expansions can impact EBITDA as we convert and ramp up new mills in the face of growing demand. However, over this time period, we have grown EBITDA 1.5x faster than revenue. U.S. housing starts grew at a CAGR of just under 4% over the same time period. Outside of housing, we have seen growth in less cyclical Repair and Remodel and shed segments. As some of you know, over the last 5 years, to meet growing demand, we have converted 2 OSB mills to Siding mills. And we are currently in the process of active planning for our next Siding group, which I will discuss in more detail later in my presentation. We have a long runway ahead of us for growth, share capture, expansion of addressable markets and capacity increases. Over the next few slides, I'll talk about our strategy to achieve this. Alan will talk more about this later, but we have refined our strategy by exiting non-core fiber and CanExel product lines and reconfiguring how we will account for any future OSB production in our Siding mills. Our strategy is to focus on the growing the core SmartSide product line. These strong growth numbers are a direct result of our relentless focus on meeting the needs of our customers. Our broad, diversified portfolio of products, including lap and panel siding, trim, soffit and shakes, and most recently, our smooth and prefinished offerings were developed for growth and our customers' needs in mind. What sets SmartSide apart is its long and lasting durability, appearance and hassle-free installation, which gives our builders and remodelers confidence in our products and homeowners peace of mind in their investments. The continued growth we've seen reflects the impact of our Siding strategy, which utilizes a segment based approach. For each market segment, from repair and remodel contractors to homebuilders and outdoor building fabricators and always with a homeowner in mind, we leverage highly tailored marketing, innovation and go-to-market support to reach and resonate with our target audiences. For marketing, we are focused on an increasing user product adoption. For innovation, we are focused on delivering high-value new products that give us access to new markets. And our go-to-market strategy is focused on expanding product availability. Innovation is central to our business, and we have had several major new product launches over the past several years. Our innovation team has been empowered to deliver meaningful future revenue growth. The market fundamentals and segment growth drivers remain strong, and we expect to see continued runway for growth for many years to come. Okay. Let me orient you to this slide. On the left, we show that currently Engineered Wood Siding where we have over 90% share is 6% of the total Siding and trim markets. On the right, we show that total siding and trim market is about $11 billion, while our addressable market is a little over $6 billion, an approximate 12% share. Our products have taken greater share of the addressable market, primarily against vinyl whose share has dropped from 50% to 19% over the last couple of decades. Although we don't include brick in our addressable market calculations right now, we are taking share in that market due to its high cost and lower install times. We believe that the overall Siding interim market as well as our addressable market has and will continue to grow. We have increased our market-facing investments over the past several years and will continue to do so because the SmartSide brand is still not as widely known as it should be. The next few slides will take a closer look at how we go-to-market in each of our segments. We take a consistent approach for all of them by identifying the customers' needs, their pain points and then determining how LP can best help them succeed. Let's talk about Repair and Remodel first. We estimate that we have 7% share of the total Repair and Remodel markets, a 10% share of our current addressable market with a long runway for growth. The primary customer in the Repair and Remodel segment is the remodeling contractor. And that remodeling contractor has 3 primary needs. They want durable products that are quick and easy to install, they want help in growing their business and they want help with products that they can access whenever and wherever they are needed. We are working hard to make sure that we deliver what remodeling contractors need by providing durable products that are quick and easy to install. Our products are lightweight and working cut like traditional wood are more durable than competing products. Combine that with our 16-foot lengths and you'll find that the speed of installation noticeably increases. In fact, we recently commissioned a study from an objective third-party resource that shows that SmartSide installs 22% faster than fiber cement. With the launch of ExpertFinish Siding and Trim this year, we now offer our products in a variety of prepainted color options, eliminating the painting time at the job site while providing the beautiful esthetic that homeowners demand. I mentioned earlier that contractors are also looking to grow their business to ensure their customers, the homeowners, are satisfied. To do this, they must grow their brand and reputation while consistently delivering on projects. LP helps with both by offering comprehensive product and installation training as well as marketing and lead generation support. We significantly increased our investments in online marketing to build homeowner awareness and generate leads for contractors through our BuildSmart loyalty program. We're also investing in online training to complement in person trainings, which has been especially valuable during the pandemic. We are also expanding access to our products by deepening our partnerships with key dealers and retailers who serve as modeling contractors. Retail stores like the Home Depot, Lowe's and Menards are key shopping destinations for contractors and have seen a boom during COVID. Our already strong presence with the retailers put us in the right place at the right time to benefit from increased foot traffic and expose our range of products to a wider customer base. In fact, we have expanded the products offered in these stores beyond just panels to include lap, trim and other products that provide more of a whole house solution. Our recent investment to improve our in-store and online presence at retail has succeeded to the point where we are the #1 searched siding brand on the Home Depot's websites. Another key destination for remodeling contractors is the one-steppers, also known as the wholesale distributor. One-steppers such as ABC Supply and Beacon specialize in selling job lot quantities of siding, roofing and windows and other exterior accessories. We are actively expanding the SmartSide product stock at one-steppers, in particular, our pre-finished product, ExpertFinish siding and trim and partnering with these key dealers to convert more contractors to SmartSide products. Turning to builders next. Like repair and remodel, we have low penetration with builders and estimate our share of the addressable portion of this segment to be 13%. Builders want to grow their businesses and their reputations. And we help them do both, especially in a market where labor is constrained and efficiency becomes more important than ever. Just like R & R contractors, builders also value the ease of product installation and industry-leading warranties. But for builders, the primary focus is product quality and fewer callbacks. In order to provide builders with a portfolio that meets their needs, we've launched new products such as SmartSide smooth siding and trim, ExpertFinish pre-finished siding and trim and strand sheds. We will be launching additional products focused on this segment over the next couple of years. These products will provide builders with esthetics that customers want and the durability they need. Beyond the advantages of the product itself, we partner with builders to promote both their brand and LP's, which leads to increased awareness and adoption. Historically, our focus has been on the small- to medium-sized builders. Big builders expect a relationship with manufacturers, and we take a One LP approach and have structured our national accounts team to provide focused support for the big builder across our OSB and Siding segments. We are also working to optimize our supply chain to ensure best-in-class service for builders and the pro dealers who supply them. We don't have the same market share with the biggest builders that we have with smaller and mid-sized builders, but we view this as a significant growth area. Finally, let's look at outdoor building segments. LP did not fully participate in this market until we started to develop high-performing esthetically appealing products, especially designed for sheds with industry leading warranties. Now we are the category year with a 17% share of a $1 billion market, a great example of how innovation drives growth by expanding our addressable markets. Outdoor building fabricators want to remain competitive in a growing market and increase traffic at their dealers' levels. To do this, they want dealers to receive the training and marketing support they need to help drive sales. LP delivers across the board, offering point-of-sale merchandising, comprehensive training and hyper local digital marketing campaigns to drive sales. We are also investing in the segment by augmenting our LP sales force with sales and merchandising support for shed dealers from a third-party, which is a well-known and respected resource for the building supply channel. I mentioned how our retail strategy helped position us to benefit from increased retail traffic. Everybody on the call is undoubtedly aware of the huge growth in sales and retail stores during the COVID-19 pandemic. Our strategic partnership with retailers like the Home Depot, Lowe's have been critical to our results far this year. In conjunction with exiting our fiber product line, we launched a new multi-use strand panel at Lowe's, that's perfect for a multitude of projects, dog houses, chicken coups, planter boxes, garage, interior liners and more. We recently expanded our offering at the Home Depot to include our SmartSide panel with SilverTech. This product features a finished grade radiant barrier to help reduce the sun's radiant energy through the panels. It's an ideal of choice for sheds and workshops that helps keep store items cooler while brightening the interior. As people spend more time at home during the COVID-19 pandemic, we've seen strong growth in this segment and expect to see that continue as homeowners look to expand their living and working space by using outdoor buildings for offices, extended work and play spaces and storage. LP has the products and the sales and marketing support to continue to grow in these segments. This slide shows where our products are being used. Green is good and yellow and red are opportunities for future growth. Our high-volume regions include the central part of the U.S., Colorado, Texas and the West Coast. Partnering with our OSB business, who has a strong presence with wood product dealers in the Southeast and Mid-Atlantic, we are growing our business in that region. In fact, our sales in the middle Atlantic region are up greater than 70% this year. With the introduction of our ExpertFinish smooth product and smooth product lines and through new distribution partnership in the area, we are focused on taking share in the Northeast U.S. We have built a great brand over time by delivering high-performing and durable products. But the secret ingredient to our success is our people. We have more than 2,000 LP SmartSide team members who come to work every day with one goal in mind, and that is to make and deliver a high-quality product and experience for our customers. For this presentation, I'm going to highlight the associates who make that happen on the front lines, our sales, marketing and product innovation teams. Our field sales team members are strategically located across the U.S. and Canada with a focus on gaining share with builders and contractors and then pulling that business through the channel. We also have an all-star national accounts team that drives product placements for the large national builders, pro dealers and retailers. The entire sales team is supported by our customer service and technical sales teams who provide technical support in the installation training to ensure customer satisfaction from the initial purchase order to the final finishing touches at the job site. Our marketing team is focused on building brand awareness and positive sentiments with professional builders, contractors and the homeowners who are interested in working with them to build or remodel their homes. Our product innovation team has arguably the most important job, especially when it comes to future growth. This team is exclusively focused on bringing new products to market that enhance LP's reputation for offering high-quality products that are easy to install and provide long-lasting durability. These teams work together to identify the needs of our customers and figure out where we can apply value for each stakeholder in the buying process. And it's through that collaboration and dedication that we can deliver quality products and experiences for our customers, which we believe is the real driver of our success. Next, let's talk about our Siding segment's operations and capacity. Our 6 primary production facilities are strategically placed near aspen forests, which we use to make SmartSide. These tend to be in the North Central and Northeastern parts of the U.S. and throughout Canada. By contrast, our ExpertFinish facilities are located in markets they serve. We are currently in Wisconsin, North Carolina and Illinois with future growth plans for the Northeast. We operate our mills as a network, so we utilize third-party warehousers and distributors to deploy product in the markets. As I touched on earlier, we've been increasing capacity to meet the strong demand for our products. We have converted 2 OSB mills to Siding since 2016, increasing our annual capacity to almost 1.7 billion square feet. Our planning team is well underway on evaluating the next siding mill. Expansion options include adding a line to an existing siding mill, converting a currently operating mill in an aspen wood basket or converting and starting our currently idle sites in Quebec and Minnesota. We expect to announce the next mill location early next year. We have a long runway of capacity expansions ahead of us. We could almost double our SmartSide capacity in the next several years as demand continues to grow, even without firing new facilities. So to summarize, we continue to be excited about the progress we've made in Siding. This is now a business of scale with a long runway for growth, both in top line revenue and in margin. Alan will discuss the significance of that later. LP SmartSide has a strong reputation as a superior, high-performance product with industry-leading margins. That is the foundation upon which everything else is built. We see significant room to gain brand awareness and market share in all market segments, and we are investing to drive growth and ensure that we have the capacity to support that growth. As I wrap up today, let me say, again, that our most important asset is our people. I am proud of their entrepreneurial spirits and the can do attitude of our employees. By innovating new products, expanding addressable markets and developing deeper and more strategic relationships with our customers, they are truly the driving force behind our growth and success. Thank you for your time and attention today. And with that, we will be glad to answer any questions that you may have.

Okay. So we have several questions that have come via the text function of the interface, and we're starting to see some questions coming into the queue for the Q&A as well. So in no particular order, I'll just sort of bounce back and forth between the two. So the first question is from the text feature and I'll paraphrase it. So you gave current market shares by category. Do you think about targets for specific shares within those categories?

At this point, we don't have specific targets because the long runway for growth is large. We generally -- the target that we're talking about is by 2025, exceeding 2 billion square feet of products sold in the marketplace. And we don't differentiate between the different segments that we sell in.

Okay. Next question is also from online is, the Northeast has been a challenge for LP for some time, including in Siding, perhaps because of the Smooth, also a higher proportion of custom and small builders. Can you tell us about our strategy for penetrating the Northeast going forward?

So we recently just brought on a second distributor in Northeast to complement the great primary distributor that we have in the Northeast. And we anticipate launching our ExpertFinish smooth, siding and trim product line in the northeast towards the latter half -- latter portion of this year and early into next year, complemented with our Smooth product line. We have also added and will be adding additional boots on the ground in the Northeast to ensure that our brand is more widely known and to pull that product through the channel.

Okay. Great. Let's -- operator, let's take the questions waiting in queue over the phone, please.

We have a question from Mark Weintraub with Seaport Global.

One question. So you mentioned that you would share with us, probably early next year, next potential conversion opportunity or expansion in Siding. Given that we saw a lot of strength in siding volumes in the third quarter based on the preliminary numbers you provided, do you need to have more capacity in place to meet what you would anticipate demand to be next year? Or is your existing footprint enough to meet realistic demand for next year in Siding?

Mark, thanks. We do believe that the existing footprint should be able to meet the needs for next year. However, moving into 2022, we believe that we will need an additional mill at that time.

Okay. I'll slip back into queue because I'm sure lots of people have questions.

Thanks, Mark. Operator, we'll take the next on phone question please.

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

First, Neil, maybe just talk a little bit about how big is the smooth product and the prefinished siding, maybe as a percentage of your current siding, either volumes or sales? And how much do you expect it to be, let's say, over the next 2 or 3 years? And maybe also touch upon kind of what it does to your margin profile, as it has more sort of ExpertFinish and smooth products?

Thanks, Ketan. So just in terms of percentages of Smooth and ExpertFinish to the total base volume that we're selling, it's a small percentage right now. It's less than 5%. And those are the products that we're going to be spending the majority of the time focused on, as we move through the next couple of years to expand their proliferation. We have the capacity to support significant expansion of both a Smooth and ExpertFinish product lines. And then I think your second question was about margin expansion. Yes, with ExpertFinish you will get margin expansion. At the rates that we're selling ExpertFinish now, it's pretty hard to see that expansion, but over the next couple of years, you'll certainly start to see that margin expansion.

We have an online question. Sorry, go ahead, Ketan.

No, that's fine. I'll jump back in the queue.

Sorry, Ketan. So we have an online question that's on the same theme. So I'll add that as a follow-up. And the question is what percent of Siding volume is currently prefinished? And where do you think that can grow to?

So the percentage of siding volume that's prefinished right now is probably 1% or less. And we are thinking that we can grow it to 30% or so of our portfolio.

Okay. Thanks. The next online question is, you mentioned that historically, the revenue growth has been roughly 4:1 volume to price on a trailing 12-month basis. Do you anticipate any change in that ratio going forward? And if so, what might drive that?

That's a good question. I would say that our focus is volume growth because with low single-digit pricing growth with the volume growth that you get, you get great expansion of revenue. So our volume growth is our focus area and I see that being the focus area as we move forward. As we mentioned earlier in the presentation, we do price adjustments in Siding on an annual basis and those adjustments are generally in the 2% to 4% range.

Okay. One more online question and then we'll go back to the phones. Can you give a little bit more detail on sort of the decision criteria or the factors that might influence the location or the parameters of the next siding mill as we think about expansion?

Yes. So the #1 priority around that is a rich aspen wood basket. That's the area that we focus on primarily. A second area that we focus on is, obviously, the employees and converting an existing mill is a lot easier than bringing a mill up from scratch. So I would say, wood and operating mill certainly are 2 of the highest criteria. Because we use a network of third-party warehouses and distributors to deploy our products, we are somewhat agnostic as to the location of that facility. And we've got several that we're looking at right now.

Okay. Operator, let's go back to the phones, please.

We have a question from John Babcock with Bank of America.

Just want to quickly mention, I guess. So it looks like you did pretty well in Siding this last quarter. And I was just wondering where you've kind of seen the most growth lately across these different channels, whether it's with the builders or the repair model or the sheds? Just want to get a sense on that.

Yes. So I would say in the last quarter, there has been strong demand for our products across all of the segments. We did see a shift in our mix to shed in retail, just because at the beginning part of the quarter, that's -- those were the channels that were free to operate. So there's been a little bit of a shift in our panel products to shed in retail, but there's been strong demand across all of the channels, John.

Our next question is a follow-up from Mark Weintraub with Seaport Global.

Also, I think historically, you've talked about 20% or 20% plus type EBITDA margin, and it seems that the just ended quarter, in particular, you've done substantially better than that. Is that 20% a number that merits reconsidering? Or is it just that this quarter, and frankly, year-to-date has been somewhat exceptional? Maybe some more color on that would be helpful.

Mark, I would say that we're always looking at the guidance that we're giving. In Q3, we have operated our mills at full capacity. So we're running at full capacity. Our input costs have been lower than they have been normally, which is certainly helping with the EBITDA margin. And those are 2 pretty big major factors that are driving higher margins in Q3. But as we move forward, I would say that a plus 20% EBITDA margin goal is certainly something that we could achieve going forward.

Yes. It's Alan here. Let's put it this way. It's certainly becoming a softer target to hit 20%. Bear in mind, this is a quarter without any sort of mill conversion inefficiencies. As Neil said, we're running very efficiently right now with high volumes. So -- yes, but these factors and all the other things that Neil has discussed are kind of bringing up that, let's call it, that average projected margin for the future.

We have another follow-up from Ketan Mamtora with BMO Capital Markets.

Can you talk a little bit about some of the other products that you've got in the pipeline in addition to the prefinish and smooth that you've talked about. Whether it's sort of on the -- anything to do with the fire resistance or anything on the fencing side, that could be coming over the next few years?

Thanks, Ketan. So we have a pretty robust what I would call pipeline of products that are sitting with our innovation team right now. We recently completed ideation sessions with numerous parties, both internal and external and have a pretty robust pipeline. What we tend to work on or the way that we work with that innovation team is, generally, we want them working on several [indiscernible] what I would call product extensions or products that would enhance what we already have. And then we've also got what we call significant product innovations that are pretty much out there 2 years from now or 5 years from now. I would say fire is a perfect example, where there are technologies out there that we could utilize, but they're very, very expensive. And so what our product development teams are working to do is to figure out how we could bring more cost-effective solutions to the marketplace. We are targeting a -- what I would call a fighter brand product that we could focus on the big builder segments that we hope to launch some point next year. And that will be a pretty big innovation launch. So we've got an innovation strategy that includes a lot of different products. And then the other thing that I'll talk about is we are -- since we have shut down our fiber production lines, we are actively working to convert some of those fiber SKUs that we did not have in our strand portfolio to strand products as well.

Operator, it looks like we've got another call online -- Another question from the phone.

Yes, We have one from Paul Quinn with RBC Capital Markets.

I think you mentioned that prefinishing is only 1% now, which implies like 17 million square feet. Just wondering how you're going to get to that goal of 30%? And what's the time line on that?

So we have not set a time line on getting to the 30%. Our ExpertFinish launch has been limited to the Midwest and North Central part of the United States right now. We will expand to the Northeast, as I mentioned earlier, later this year and early into next year. And then we'll follow-up with quick expansions into the Southeast and Mid-Atlantic. And we're also talking about a softer launch into the western part of the United States at some point next year. So we're just getting started, Paul, on this, but we're looking to rapidly ramp up the product line. I may have misquoted the percentage if you did the math. Should be what you did the math to be, which is more accurate, we are selling about double that volume right now, but it's still a very small percentage.

Yes. We've got a couple of online questions that are similar enough. I'm going to basically combine them. And the thrust of the questions is about the importance of aspen to Siding production and whether we see any risks to aspen availability, such as, for example, if there were an aspen analog to the Western pine beetle or something like that, that threatened LP's availability. What our options might be were something like that to occur?

So near term, we do not see any issues with the aspen wood baskets that we operate in or the wood baskets that we're looking at. Like Nicole said, they're a self-generating tree. A lot of our wood baskets are heavily loaded with wood right now and have a long runway of usage. Our foresters are constantly looking for different places to access wood, and we have active programs looking at whether we could use ultimate species. But for right now, Aspen is the wood species that we're most comfortable using.

We have one more question online. And that is, as we get positive mix shift with more prefinish, what do we expect about EBITDA margins and growth thereof relative to fiber cement competitors?

All will fundamentally stay on that. The first of the question is, will that push margins up and all other things being equal? Yes, it will.

Okay. At this point, we have a few questions that have come online that are more OSB-specific, we will absolutely get to those. But what we're going to do next is transition to the OSB presentation. And we will, of course, resume Q&A when we're done with that and we'll get back to those OSB-specific questions in a few minutes. So at this point, I will introduce Jason Ringblom, the EVP and General Manager for OSB business.

Good morning, everyone. Before I get started, I just want to take a moment to thank all of you for attending today's webinar. And we've been looking forward to this opportunity to share our strategy with you and hope that you find it as exciting as we do here at LP. I thought I'll share a little bit of background on myself. My name is Jason Ringblom, and I'm the General Manager of LP's OSB business. I began my career with LP in the summer of 2004 after earning a degree from the University of Minnesota. Started as an entry-level sales rep. And from there, earned opportunities to lead a variety of sales, marketing and supply chain teams leading up to January of 2017 when I became GM of OSB. Having spent the majority of my career in the market, I must say that I'm more excited than ever before about our growth strategy, specifically the role of innovation and how the breadth of our specialty product offering is going to create value for our customers and shareholders in the coming year. So with that as a quick introduction, I plan to jump right into my presentation, which will include a brief overview of the business and the market that we play in, along with a review of our strategy and why we're excited about OSB at LP. So given that some of you are new to LP, I thought I would provide a brief summary of our operating footprint and talk a little bit about the addressable market for OSB. We have a national footprint that includes 9 OSB plants that are capable of producing 4.5 billion feet on an annual basis. If you look at the map, you'll notice the blue circle, that indicates the location of our Peace Valley, British Colombia facility. As Aaron mentioned earlier, we indefinitely curtailed production in July of 2019 due to weak demand. Peace is the largest OSB plant in our network with an annual capacity of 800 million feet. And currently, we're keeping this mill warm and ready to come back online when the market demand is sufficient to support a mill of its size and I'll talk a little bit more about this later in the presentation. Getting back to the market today, we play in a 23 billion of square market segment and estimate our market share to be roughly 16%. This chart here was produced by Forest Economic Advisors, and it provides a little bit more of a granular view of the end-use market segments for OSB in North America. We've positioned our portfolio in a way that allows us to play in all of these market segments. That being said, though, you'll notice that single-family new construction is more than 2x the size of the next largest segment, and it's also forecasted to grow faster than all other market segments over the next 2 years. We see this as important for a couple of reasons. First, a single-family housing start consumes roughly 3x the volume of a multifamily housing start. So a greater proportion of single-family starts relative to multifamily starts simply means more OSB demand. The second is a little bit more exciting, though, and I say that because the majority of our specialty products or what we call our Structural Solutions line are catered to the single-family market segment. This includes products like LP TechShield, LP FlameBlock, LP Legacy Flooring, LP WeatherLogic and a host of other products that contribute higher and more consistent margins to the business. And to promote these products, we have one of the largest field sales teams in the industry calling on end users and key influencers. As Neil mentioned, this team, along with our broad product portfolio, is a competitive advantage for LP and a primary reason we're confident in our ability to deliver on our growth strategy. From here on out, I plan to talk more about strategy. From a market-facing perspective, we're focused on diversification, both from a product and a customer mix standpoint. Our channel strategy provides us strong access to all of the end-use segments that I touched on earlier. And again, our diverse product mix is what makes us unique and relevant to our customers. Not only do we make higher, more consistent margins on these products, but we believe the diversity of our offering provides us options to improve the overall utilization rate of our plants through a traditional housing cycle. Additionally, through our growth and innovation efforts, we brought new products to market, like LP FlameBlock, Legacy flooring and WeatherLogic in recent years. That have allowed us to grow our Structural Solutions volume to 44% of our portfolio, which is up 20 points versus 10 years ago. Building off the point I made on the last slide, I thought I would spend a little bit of time talking about asset utilization. Specifically, how we balance growing our Structural Solutions portfolio while matching capacity to demand on the commodity side of the business. At the end of the day, it's really not that complex. However, I'll admit, it's a bit more art than science. And to put it simply, we, at LP, emphasize a market back approach, primarily listening and getting feedback from our customers, which in turn informs the operating strategy needed to service LP demand. Our main focus when matching capacity to demand is to isolate the downtime to our least efficient plants. To illustrate this, I ask you to draw your attention to the table that shows a side-by-side comparison of our 2015 and 2019 results. Here, you'll notice a material difference in our performance at 2 separate low points within the cycle. From an operating perspective, the main difference is that we isolated our downtime to Peace Valley in 2019 rather than spreading the downtime across a handful of plants. This allowed us to get more cost out of our network while running the remainder of our plants closer to full capacity. Second point I'll mention on this slide is that the growth of our total price spread versus commodity. This change is evidenced in our sales mix changing more to specialty and less commodity, which was also a contributing factor to the improved performance between these 2 years. So I've talked a little bit about how we manage capacity and what we do to optimize our network. And with that as the backdrop, now is a good time to review our OEE strategy, which simply put is an all hands on deck initiative to improve efficiency at our plants. Our OEE formula factors in uptime, production rate and quality. This is an initiative we began in 2015 and doubled down on in 2017. We're on track to improve our performance by more than 10 points since this initiative began. And this has allowed us to reduce our fixed cost of production by more than 10% since 2015 and has also opened up new capacity that's comparable to a midsized OSB plant. I think also this initiative illustrates the emphasis that we put on continuous improvement at LP and what we're doing on purpose to drive focus on the controllables in this business. This next chart really shows the impact of our strategy, particularly at the bottom of market cycles in this business. The continuous improvement is evidence -- evident in the way we are managing cost, which is essentially flat over the past 10 years with a much richer mix of products in the portfolio that costs more to produce. The results show a steady rate of improvement at the low points in the cycle. And in 2019, our decision to curtail Peace Valley and isolate our downtime to a single plant was critical to staying in the black. Our decision to bring this facility back online will ultimately be dependent on demand and not price. So when might it make sense? At the end of the day, we need to be confident that demand over a 2- to 3-year horizon will be sufficient to consume an incremental 800 million feet of capacity. And for those of you new to the industry, a general rule of thumb is that 100,000 housing starts essentially equates to approximately 1 billion feet of demand, all else equal. The bottom line here is, given the number of variables in play coupled with the investments required to ramp up the plant, is that we need to be certain that demand can support a facility of this size before we make the call. So in closing, why should you be excited? Brad said it at the beginning, and I'll reinforce his point on the housing demographics, which are likely to strengthen demand over -- for OSB over the next several years. Secondly, while it may be tempting to look at OSB as a moment-to-moment commodity price play, I challenge you to look at this business over a rolling 3- to 5-year cycle. Additionally, because of our focus on those things within our control, this business is no longer a so-called boom and bust business. Over the past 5 years, we've demonstrated the earnings potential of this business by generating more than $1.4 billion of EBITDA. Our OSB business is different today because of our disciplined capacity management and the actions we've taken to grow our specialty mix and relentlessly manage costs. So with that, that's all I have on our OSB business for today. Again, I thank you for your time and attention this morning. And I'll open up the call for questions.

Okay. Thank you, Jason. We're going to, again, go online as questions begin to file into the queue and then we'll go to the callers. First, there's a question related to ESG that I didn't get to earlier, so I want to get to that. And the question is, what percent of -- how much of our energy consumption is generated through biomass? And so the answer on that one is, it depends how do you draw the distinction between thermal energy or electrical energy. And so first, I'll say we're sort of in the process of quantifying that right now. The significant majority of the thermal energy that we use for heating the press thermal oil to cure the resins in the press is generated with biomass. I believe only one of our mills actually has an electrical cogen capability. So the bulk of our electrical energy is not generated by the biomass processes that we described earlier. But as I said before, we're in the process of quantifying that. And so as we gain clarity on that, we'll share more details on that going forward. The next question I have online is, in reference to order file duration, if we say that we have a, say, 3-week order file, what does that mean about the prices at which we book open market orders taken this week for delivery 3 weeks from now? If you could talk about that a bit, Jason.

Yes. So as Aaron mentioned earlier, we tend to manage to a 2- to 3-week order file. We don't like to get out beyond that, just due to our desire to ship on time and keep order files fairly tight to make sure our customers know we're keeping products available for them. But typically, when going out 2 to 3 weeks for pricing above Random Lengths, whatever price we sell at ultimately will be realized at the time of shipment, which may be different than what Random Lengths is priced at, at that time, depending if the market appreciates or falls during that period of time.

Okay. Next question online is, how has LP's OSB volume mix between contract and open market changed over time? And what does it typically look like in a strong market versus a weak market?

Good question. And I would say, generally speaking, over the last 10 years or so, we try to target roughly net 60% to 70% of capacity committed that hasn't changed dramatically, but what has changed with our -- the mix profile of the business changing is we're committing a greater amount of structural solutions to contract versus commodity. So that's the main shift in our committed volume program that's taken place over the last 10 years or so.

Okay. Next online question. With current prices in its $700 range, an improved industry capacity -- capital discipline and positive housing backdrop do you think this is going to create a structural increase in the long-term normalized price? Or what do you think the next cycle, if you will, is going to look like?

It is a great question. I think 6 months ago, my answer to that might be different than it was today. I mean the reality is most housing forecasts were calling for levels, 1.2, 1.25 back in April and May and that's changed significantly. So I'm not going to predict what the future holds, but I would say we feel very optimistic about the long-term housing demographics and what that means for OSB demand going forward.

Just want me -- this is Brad to Jason's answer. The thing that we could control going forward is the way we operate. And as Jason has outlined and the job, Jason has done in the last 3 years, we do plan to operate with discipline. Matching our production to our order file. And really, when you look at long term, what price is going to do, it's really dependent on how the industry operates and we really don't have any insight to what other operators might choose to do in the future. But for LP, we will continue to be focused on matching our capacity to the realizable demand in the moment.

Given the -- one last question online, then we'll go to the phones. Given the rule of thumb, about 100,000 starts being about 1 billion feet in the 3:1 for single-family and multifamily. What do you think total industry consumption looks like at 1.5 million housing starts? And what does that say about capacity utilization?

Yes. 1.5 million, I would say, will be in the mid- to upper 90s, and there's a high probability that the capacity that came off-line in 2019 would be needed at that point to service demand at that level.

Okay. Operator, we'll go to the phones now please.

We have a question from George Staphos with Bank of America.

Jason. My question actually is a good segue from that last online question. When we consider on the one hand, the potential for a greater number of starter homes for the first-time buyer coming into the market relative to, in a post-COVID world, we're adding new features, offices, greater amount of space for people working in sheltering in place. What do you think the long-term OSB consumption per single-family start might look at relative to that thought you gave on the 1.5 million start number. And my other question, and I'll turn it over when we think about Peace Valley, recognizing that fiber and location are key drivers of the cost position and in turn, when you might bring that back on or the considerations in terms of when you bring that on. Are there anything that you could do to improve the cost position in the interim that would then in turn trigger when Peace Valley might be able to come back on?

Thanks, George. Appreciate the questions. In terms of the first one, I would -- in regards to the long-term consumption of OSB, especially with a shift in mix to more single-family starter homes. I would say, generally speaking, that shift is going to increase demand for OSB, just given that the proportion of single-family starts relative to multifamily is going to grow. So we see that as a positive just given that 3x the volumes used on single-family versus multifamily. So I hope that answers your question. I guess the second one on Peace Valley, since we made the decision to indefinitely curtail that plant back in July of 2019 and we've kept the facility warm in good shape. We've had a crew of about 15 key employees there, really putting together a plan to make that facility competitive longer term. So we feel like we're in good shape there from a planning and cost perspective. But ultimately, at the end of the day, it's really the demand picture that's going to determine the timing of a restart and ramp up rather than our cost position. We believe our cost position can be very comparable to the rest of our network.

Jason, my question is really more on the consumption per single-family start, how that might change over time. Sorry for double dipping. I just want to clarify.

So George, this is Aaron. If your question is related to the -- an increase or decrease in size of a single-family home or changes of preference about rural versus urban or work-from-home or building, things like that. Any trends that increase the size of homes is going to increase the size of OSB. Any trend towards single-family away from multifamily, of course, is going to increase that. We've heard some anecdotal evidence about an increase in shed-building and similar R&R type projects to enable things like working from home or multigenerational living, things like that in response to the pandemic. Basically, anything like that, that drives either the building of additional space on an existing home or the addition of an outdoor building, convert to an office. Anything like that could increase consumption in OSB. But I would say in terms of size, the average size of a single-family home has varied within about a 5% or 6% range for years. So given all the other variables in the market, per square foot home size increase is unlikely to really show up. What will show up dramatically is an increase in the mix of single-family homes and an increase in R&R activity designed to change the size and/or function of a home in response to what's going on right now in the world. Does that answer your question, George?

Very clear.

Our next question comes from Mark Connelly with Stephens.

I want to go back to your comment about this no longer being a boom and bust business and I certainly agree. But the volatility of OSB prices remains the key reason for the high volatility in the stock. We've certainly seen better supply management in the last couple of years, dramatically better, including your own. But we still see these periods of extraordinary price volatility. So how do you think about that price volatility given the change in behavior? And do you think that, that can be overcome? I'm also curious, do you think that this current spike is different enough from the previous spikes that we should be thinking, setting this one aside.

I think we'll cover some of that when we discuss financial strategy later. And to the extent that we don't, could I ask that we save that question to the final Q&A session and then we'll certainly attempt to answer it then.

And we have a question from Mark Weintraub with Seaport Global.

Just coming back to Peace Valley for a second. I apologize the slide by pretty fast, but I thought I saw towards the bottom that it would take 6 to 9 months to build the wood decks effectively. Did I read that right? And does that mean that basically, if you were to make a decision to move forward Peace Valley, let's say, January 1, that realistically, it would be 6 or 9 months. And I realize actually that might be a problem given time of year. But let me put it -- ask the question differently. When -- how long will it take you to actually get Peace Valley up and running after you've made a decision to hit the button to go forward?

Thanks, Mark. I appreciate the question. Yes, I would say, generally speaking, from the time we make the decision. It's going to be a 6- to 9-month period of time before we start producing first board. That incorporates building up the log deck, executing the capital and maintenance required and also staffing the facility, the scale we mentioned on that slide, 175 folks for full capacity.