Participants

Aaron Howald; IR Contact Officer; Louisiana-Pacific Corp

Brad Southern; Chief Executive Officer; Louisiana-Pacific Corp

Alan Haughie; Chief Financial Officer, Executive Vice President; Louisiana-Pacific Corp

Susan Maklari; Senior Equity Research Analyst; Goldman Sachs

Michael Roxland; Analyst; Truist Securities

Sean Steuart; Analyst; TD Cowen -

Steven Ramsey; Analyst; Thompson Research Group -

Matthew McKellar; Analyst; RBC Capital Markets

Mark Weintraub; Analyst; Seaport Global Securities LLC

Ketan Mamtora; Building Products Equity Research; BMO

Kurt Yinger; Analyst; D.A. Davidson & Company -

Presentation

Operator

Good day, and thank you for standing by. Welcome to the Q3 2024 Louisiana-Pacific Corporation earnings conference call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a Q&A session to ask a question.
During this session, you will need to press star one on your telephone. You will then hear an automated message. Advising your hand is raised. To withdraw your question. Please press star one again. Please be advised that today's conference is being recorded.
I'd now like to hand the conference over to your first speaker today, Aaron hold Vice President, Investor Relations. Please go ahead.

Aaron Howald

Thank you, operator, and good morning, everyone.
Thank you for joining us to discuss LP's results for the third quarter of 2024, as well as our updated outlook for the fourth quarter and full year. Hosting the call with me this morning are Brad Southern LP's Chief Executive Officer, and Alan Haughie, LP's Chief Financial Officer.
After prepared remarks, we will take one round of questions. During this morning's call, we will refer to a presentation that has been posted to LPs IR web page, which is investor dot apachecorp.com. Our eight K filing, earnings press release and other materials are also available there.
As always, I will caution you that today's discussion may contain forward-looking statements and non-GAAP financial metrics as described on slides 2 and 3 of the earnings presentation. The appendix of the presentation also contains reconciliations that are further supplemented by this morning's eight K filing. Rather than reading those statements, I will incorporate them by reference. And with that, I will turn the call over to Brad.

Brad Southern

Thanks, Aaron, and thank you all again for joining us today.
Vlps teams continue to execute our strategy effectively in the third quarter. As a result, citing that sales grew by 22%, well above the underlying markets we serve. Siding set new records for sales and EBITDA, help our ongoing improvements in expert finished margins. Our OSB business operated safely and efficiently with strong price realization to make the most of the sequentially softer price environment.
Page 5 of the presentation shows LPs high-level financial results for the quarter. Delphi generated $722 million in net sales with 22% side and growth almost completely offsetting the $88 million impact of lower commodity OSB prices. Sidings EBITDA of $123 million was a record expert.
Finished saw another record quarter for both revenue and margin and with margin expansion driven by higher volumes and efficiency improvements that are dedicated pre finishing facilities under $53 million of EBITDA translated cleanly into $184 million of operating cash flow.
We invested this cash and our future growth with $44 million in capital expenditures in the quarter before returning $91 million to shareholders through dividends and share repurchases, leaving LP with nearly $900 billion of liquidity in a very strong balance sheet. Let me turn briefly to the market and what we are seeing in the channel.
The new home construction market is slowing somewhat with the combined effects of the risks that rebound in mortgage rates and the approach of colder weather. Housing starts have leveled at about $1.4 million in recent months, which is also the current consensus for next year. But the single-family mix remains higher than average in the new construction market, LPS over indexed to single-family starts.
So it was encouraging to see the run rate for single-family starts back above 1 million in the September census report. Repair remodeling spend is still a few percentage points lower than last year, but the outlook for R&R has improved.
The recently published a leading indicator of remodeling activity published by the Harvard Joint Center for Housing Studies suggest that R&R spending has bottomed and projects to return to positive year-over-year growth growth in FY2025. Given that about a third of LP, SmartSide siding goes for our applications. This is a positive development.
We believe inventories in the channel within normal seasonal ranges post the inventory is somewhat leaner, which might be contributing to recent strength in commodity prices, citing inventory assume or an absolute volume of this time last year, but lower in days of sales that consistent with normal seasonal patterns, we have announced a price increase for next year and siding and that will be a factor as we manage your in shipments to position our sales and channel for a strong start 2025.
Looking forward, interest rates and affordability remain the dominant macroeconomic factors to watch, but housing undersupply and the aging housing stock must ultimately to be resolved. We believe that LPs uniquely well positioned to address these needs.
And as a result, we are confident that we will continue to grow siding and structural solutions in 2025 and beyond. Our results demonstrate that LP strategy is working and reinforce our confidence to invest in future growth, which Alan will speak to in a moment. Before I turn call over to hail, I'll highlight two additional accomplishments for the quarter.
First LP published environmental product declaration for the entire SmartSide trim and siding product portfolio. Bcp days validated by AST. human international confirmed that SmartSide expert Federation builder series products, our carbon negative, meaning they store more carbon Dennis emitted throughout their lifecycle.
This is made possible by our sustainable use of renewable fiber resources as well as our innovative and efficient manufacturing processes. And I want to thank the LP teams to support this, especially for three operations and our sustainability team. Last and most importantly, LP was notified in August that we have had earned a 2023 safest company award from APRA.
The engineered wood association is the 12th time and the 16-year history of the award program. But LP has worn the safest companies designation five of our mills, also more than individual site to recognitions. I want to thank and congratulate every LP team member for this recognition and challenge us all to keep building upon LPs high performance safety culture.
Safety is a core value for all of us at LP of all, we are pleased with the order. We won't rest on all the holes. And with that, I will turn the call over to Alan for more detail on our results and guidance. Before we take a round of questions.

Alan Haughie

Thanks, Brett.
As usual, Slides 7 and 8 of the presentation shows third quarter year-on-year variances in net sales and EBITDA for the Siding and OSB businesses. Both are fairly straightforward with the exception of some timing wrinkles in siding that I'll spend a bit more time on before I move on to our updated guidance for the full year.
Turning to Slide 7. Citing net sales increased year-over-year by $75 million or 22% for revenue of $420 million on 460 million square feet of volume, both sequentially above second quarter levels. This year-over-year growth is the result of 6% higher average selling prices and 15% volume growth.
Roughly half of the 6% price improvement was the result of annual list price increases with the other half due to favorable mix. Expert fish comprise 9% of volume in the quarter. Context, the incremental volume generated EBITDA of 44% contribution margin, that is $24 million of EBITDA from volume divided by $54 million of revenue from increased volume.
When we include price, the contribution to EBITDA on incremental revenue was 61%. You can find that by adding $22 million price to both the numerator and denominator in the previous calculation. And this healthy conversion is exactly what we should expect from the business as it continues to grow into recently added primed capacity at the Golar Poulton and expert finish capacity at Bath investments in sales and marketing, mostly boots on the ground with the sales team totaled $6 million more than prior year on a helping LPs siding business continues to grow despite flat housing and lower year over year.
Repair and remodel expenditures and raw material and freight costs were roughly in line with last year. In the other column, the far right. The first and simplest item is a $5 million EBITDA benefit from the non-recurrence of last year's press rebuild at Dawson Creek.
The remaining $8 million benefit is the net of a handful of small puts and takes, but one item does bear mentioning as it will impact the fourth quarter of maintenance project and a whole mill that was planned for September was pushed into October because of delays in equipment delivery caused by the East Coast post.
The project is currently underway and it will require about four weeks of downtime for total cost and production impact in the second half of the year is unchanged for the delay pulled production forward into the third quarter and pushed costs into the fourth. The delayed cost and inventory absorption, effective extra production boosted third-quarter EBITDA by a bit over $5 million and added probably it points to the EBITDA margin.
Now I mention this only because all else equal, one could reasonably assume that this pull forward might create a corresponding reduction in our fourth quarter EBITDA outlook. Happily, this is not the case as our I'll detail in a moment, and I get to our updated guidance on Slide 8.
I'm sure you'll all be relieved to know the OSB waterfall is far simpler, so I won't belabor it. Commodity prices were lower, reducing Neovia sales and EBITDA by $88 million variance system, higher volumes, incremental margin from structural solutions, raw material and labor inflation will all immaterial by comparison for the story.
This chart doesn't tell very well is that the combined impacts of OE. cost control and strong price realization allowed the OSB business to outperform the small increase in our algorithmic guidance, implied by modestly higher Random Lengths prices late in the quarter.
Slide 9 shows a similarly straightforward quarter of cash flow. This $184 million of operating cash flow includes $44 million of working capital inflows, mostly from accounts receivable and $73 million of share repurchases of shares outstanding to almost exactly $70 million. As of this 1st of November, we also made a locally funded $17 million investment in a nonconsolidated joint venture in South America.
This venture already well established specializes in off-site construction of modular social housing, and this should help stimulate and sustained demand for LPs products address chronic undersupply of housing in the region and support the ongoing shift in South American building practices from bricks and cement more sustainable and seismically robust engineer, I would so Slide 10 shows our updated guidance.
Ongoing growth and margin expansion in siding are expected to more than offset the timing issue I mentioned earlier. So we now expect Q4 citing revenue growth of between 9% and 10% for sales of about $365 million, and this would bring full year sales growth to about 17% and revenue to about $1.55 billion. Sidings fourth-quarter EBITDA should be between $70million to $ 80 million.
This would deliver full year EBITDA in the 390 to $400 million range for a margin of about 25%, which is our long-term target. In other words, continued strength in the siding order file has allowed us to increase the full year growth and margin expectations for siding by about 1.8 compared to last quarter's full-year guidance and SB. Random Lengths prices have climbed a bit in the fourth quarter, but we expect the typical seasonal downtime to impact volumes and incorporating these factors and using our normal approach for OSB.
Assuming prices stay flat at current levels, we would expect OSP EBITDA in the fourth quarter in the $15million to $25 million range. Adding this all up and as usual, and netting off South America's EBITDA with unallocated corporate costs, we now believe that LPs full year 2020 for EBITDA will be between $655million to 675 million, an increase of about $65 million compared to the midpoint of our guidance from August and $13 million of this is coming from signing CapEx for the year should come in around $200 million.
And as Brad said, growth and share gains gives us continued confidence to invest in new siding capacity. As a result, while we won't get offer revenue or EBITDA guidance for 2025, we do expect CapEx for the next two years to be meaningfully higher than this year's as we launch the next siding expansion project.
We'll share more specifics on this project in coming quarters. For now though, I can say that we expect total CapEx investments next year to be between 350 and $375 million, including 100 to $125 million dedicated to the next siding mill, most of which should lend in the third and fourth quarters.
In summary, it was another strong quarter for LP. We executed our strategy safely, and we're well positioned to see continued growth and margin expansion in 2025 and beyond. And with that, we'll be happy to take a round of questions.

Question and Answer Session

Operator

Thank you at this time, we will conduct a question and answer session. Each participant will be allowed. one question and a follow-up question. As a reminder to ask a question, you'll need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one.
Again, please stand by while we compile the Q&A roster.
Our first question comes from the line of Susan Maklari of Goldman Sachs. Your line is now open. Thank you.

Susan Maklari

Good morning, everyone. Thanks for taking the questions. Morning, Michael, and good morning.
And maybe starting off line on Alan's comments on CapEx. I guess, can you talk a little bit about what you're seeing in the business and how you're thinking about the demand that will come through over the next several years that has driven the decision to perhaps invest in the the next wave of capacity additions in siding for?

Brad Southern

So we are obviously very pleased with the growth we've seen this year and smart side on the recovery from from a disappointing year last year. And as we project forward and at any reasonable growth rate, we're now getting to a point where we are on really looking at that next wave of Kaplan.
Lastly, they were going to need. We do tried to stay ahead of production. So we don't mind bringing on capacity a little bit early in order to minimize the chances of going on any kind of allocation. So that is given the growth this year that's resulted in us stepping up the planning for the next significant capacity expansion with Allen or I mentioned in the call against both of us, did we are looking at that investment next year, beginning that investment next year?
And that would that would get us up and running either late 2026 are in 2027, depending on the timing and how the year plays out next year's harvest side at that time.

Susan Maklari

Maybe just thinking about priced for 2025. You mentioned that you saw passage of this quarter coming from mix versus on a like for like basis. But as you think about putting pricing through for next year, can you just talk a little bit about the range that you expected and and how you're managing the inventories heading into that increase?

Sure.
So we're back to kind of historical normal price increase environment that we work that we were experiencing pre-COVID. So we're out currently with a gross price increase depending on skew in region of 4% to 5% and we believe will net around three as Lisa a good a good way to plan for next year that that excludes any kind of mix change next year.
The price increases effective January one, and we will be limiting on sales in December so that we don't get we have tried to minimize pull forward as a result of the price increase and set ourselves and our in our own distribution by makes up for a really good one is for sales goes. So does the current plan and we're executing to it. And as I mentioned, we are out with that price increase. So it is in the market now.

Susan Maklari

Okay. That's helpful color. Thank you. Good luck with everything. Okay.

You're welcome.

Operator

And thankyouOur next question comes from the line of Michael Roxland of Truist Securities. Your line is now open.

Michael Roxland

Yes. Thank you, Brad Allen & Caron for taking my questions and congrats on a very strong quarter.
Hanam. First question, I have this at your SmartSide has continued to gain share and what does the competitive response from fiber cement final?
Have you seen increasing price pressures? Are they trying to retain and win back some share in what has been LPs response?

Brad Southern

Well, look, we're we're competing in a very competitive environment. That's always been the case by about 25 years of working smart around SmartSide business. And so I would say the competitive situation is normal. And so we are negotiating deals with big builders.
Obviously, there's a couple of counterparty that's that's trying to hold on the business on and so that that typically the kind of with from a pricing standpoint that is managed through back-end rebates from US customers.
But I would say right now still kind of normal as far as what we have to do in order to secure this business. So I think primarily what's beginning to be realized in the market more and more as just the value proposition of the product.
It is superior to the substrates that each quarter in there. And that's that is much of the reasons we're winning. Is there any pricing concessions?

Michael Roxland

Got it. Okay. Thanks for that brand. And then just quickly on Sagawa halt in its own mills that you may have not been running fully. What's your role at given that you do intend to add capacity?
What's the outlook into? I guess one, whether we'll have those mills currently operate tend to where do you see them to operate now to that would warn you to bring on our aim to bring on new capacity call on a year-and-a-half, two years now? Thank you for accessing.

Brad Southern

I'll take a whack at that. In Q3, our volume was $460 million on a nameplate capacity of 2.3. So that annualizes out the utilization in the high 70s to 80% range. Of course, with seasonality, Q2 and Q3 will tend to be a little bit heavier than Q1 and Q4.
So with that pattern continues, you just sort of project that forward. And that gives us the confidence that we'll need capacity in the timeframe that Brad mentioned earlier, signal and hold and bath are all running very well, but they exist within a system. And so their their capacity utilization is a function of product mix and geographic demand patterns and a lot of other factors that we're very pleased with the ramp up.

Michael Roxland

Thank you.

Operator

Thank you. Our next question comes from the line of Sean Steuart of TD Cohen. Your line is now open.

Sean Steuart

Thanks. Good morning and congrats on a very good result. I'm Brad, wondering if you can give some context on the siding expansion options. And as you look ahead as we start to build CapEx in 25 in 2010, your forecasts, whether it's expansion at existing sites, Wawa, what you're thinking of in terms of the best option and for adding supply?

Brad Southern

Yes. Great question. So let me let me just remind the audience of the options that we have.
We do have two remaining Aspen based OSB mills, one in Quebec, one in British Columbia on that as a potential on the future of potential conversion option for us. We do have the the idle facility and Wawa, Ontario that we're now that we're studying in detail.
And then we have options at existing siding mills to press lines. And so all those are still on that table for this next wave of capacity. What will drive on the decision will be, first of all, the feasibility of converting that one of the either the to Aspen paper mills in Canada, those are large press setups in either case down mental Aki or Peace Valley would be the by far the biggest pressed the existing in our siding operations.
And so that there is some technical things we'd need to work out of McDATA feasible conversion at this time. And then we have Wawa and adding a press line at our at our existing facility. I like both of those options. What will drive the decision there will be capital capital efficiency.
As it relates to those two, Huawei is essentially be a mill startup for us. We're adding a press line might be a little bit more on capital, less capital intensive, but then also weighing into that we now run are citing a portfolio as a network.
And so when you when you look at that, the way we distribute SKUs across our current platform, you look at their location, you look at her were growing geographically with customers that can swing us regionally into favoring capacity at a mill and Houlton, Maine versus a mill in Ontario versus Amylin Segovia, Michigan, Amylin, Dawson Creek, British Columbia.
So all that we're still in the preliminary phase of planning that out from a network optimization, capital efficiency. What would probably be doing soon is ordering some of the or getting approval from our Board to order some of the equipment that is kind of side agnostic.
And then when we get into the middle part of next year, that's when we'll really have to be sharpening the pencils on location and making a commitment to where. But at this point, that decision has not been made, but we've got a ton of great options. That's the point and on and we will do to do we'll do the will make the decision based on net net present values of the equivalent some capacity that we made.

Sean Steuart

That's great detail. Thanks for that. My second question, Brad, is a hypothetical one. Wondering if there any internal views its if Trump wins the election and proceeds with a blanket tariff on imports. Is there any internal view on that?
I guess, your exposure to Canadian panel and our imports of Canadian panels into the U.S. at a loaded question, but wondering if you have any internal these on that.

Brad Southern

Look, I'll let me just the one thing that I think that we should be transparent about our auto. I don't really have a view on it impacting panel flow across the border OSB. or siding. And we do we do on get a significant portion of our MDI. from a resource in China.
And while we have been working through the tariff issues in the economics around that as part of a over the past month, since I took office and Biden kept the truck, the young tariffs in place, that's the only kind of cost of risk that we would be facing. I know there's never been any limitations on our ASP or any any Terrafina will be going across the board.
So I don't anticipate that becoming something that in the near term. But I mean, who knows so I will respond accordingly, but some others. And I mean, there would be certainly an impact on OSB pricing, if all the sudden Canadian, our speaker and flow into the US.
And so just that I would be a lot of offsets of kind of understanding what the true impact of that would be. But I don't we're not planning on that being an issue. Whoever wins the election, but keeping an eye on imported raw material from China could be impactful to the industry, and it would be impactful for us as it relates to MDR purchases.

Sean Steuart

Understood. That's all I had. Thanks very much. Welcome and Kim.

Operator

Our next question comes from the line of Steven Ramsey of Thomas Rich Thompson Research Group. Your line is now open.

Steven Ramsey

Good morning at a couple of questions on our builder series. First one being the attach rate on that product have been very strong year to date. First, is this something that could have upside on the attach rates as you look into 2025? And then maybe just stepping back is still there series a net benefit to mix for these attach rates?

Brad Southern

Well, first of all, let me take that into 2025 years. We are expecting continued success with that as we can as we build credibility with the big builder base and continue to work on the current becoming the the choice for builders and those those talks are ongoing.
We're gaining our share of wins in those talks. And so yes, I see builder series growth being a meaningful part of our growth story for next year. And then the second part of your question, I think is what they own their tax rates, what that does pull through trend and soffit and some panel sales into the builder channel and even into distribution.
And those typically waste for trauma or higher margin items for us. So while I would say builder series is condom margin neutral to us as part of our portfolio, the pull through on other skews that that are sold along with our lab siding, which is builder series, especially as it relates to trim, can be margin accretive to us.

Steven Ramsey

Okay. That's helpful. And then on always be structural shipments does being lower than commodity shipments for the last two quarters. Kind of what is driving this in the near term? And then how are you thinking that this dynamic shapes up in Q4 heading into next year?

Brad Southern

What I mean, we're still we're really focused on growing our Structural Solutions as a percent of our portfolio mean that can change.
It does change quarter to quarter as some of them. And frankly, as big builder business pools, commodity OSB for one thing. But also we do manage that around margins. And so we're I think we're in a situation that we're making sure that selling structural solutions is margin accretive to us that when that's not than we could go back to more commodity type sales.
So we're going to save the trend of structural solutions as part of our portfolio is going to continue to increase. But quarter to quarter that there are variations and that can happen as the price and margin dynamics of our of our commodity, OSB and structural solutions.
And the preference for some of these big builder deals that we do might may pull might wait commodity OSB greater than than what we would like in the moment. But ultimately, we're focused on a strategy to grow that. And I'm sure will be successful there. But in reality, they're going to be swings as it relates to what our customers want it to Tom makes sense.

Steven Ramsey

Thank you.

Operator

Thank you. Our next question comes from Matthew McAllen of RBC Capital Markets. Your line is now open.

Matthew McKellar

Hi, good morning. Thanks for taking my questions. At the Q4 citing revenue guidance implies EBITDA something like 13% quarter over quarter at the midpoint. I think care, which again, usually I think poor sequentially into Q4 compared to what you've done historically.
Is there anything you're seeing the order file that suggests your recent pattern of sort of outperforming normal revenue seasonality should reverse?

Brad Southern

No, I'm not sure there's anything unusual here. But if I if you look back over the last couple of years, you reference normal. I'm not sure what normal is. I think that's the challenge we face. If you look at the profile of revenue in 2023, that was definitely abnormal. And we were as it were coming out of the destocking.
And again, generally speaking, bucking the seasonal seasonality trend. So what you're seeing reflected in Q4 right now, and our Q4 guidance is every time I would tend to have most most seasonally normal pattern if we jump back four or five years as well, as Brad mentioned earlier in response to one of the questions as making sure that we effectively we manage demand relative to the January the first price increase that if the principal factors that make this Q4 compared to Q3, look a little stock.

Matthew McKellar

Okay. Thanks very much for that color. And the last one for me. Just I mean, recognizing it's a somewhat smaller part of your business, how material do you expect a pickup in South American volumes to be with the investment in the modular housing business you've noted?
And could you just provide a bit more color around why this was an attractive investment cell therapy?

Brad Southern

So will the South America strategy from day one has been a conversion strategy away from a scenario of type of construction.
This investment kind of really is strategic for us in that this joint venture partner is a major manufacturer module housing and integrated all the way through to the sale of that in the real estate development. So it's very strategic partner. And I've been I've been a large customer for us.
So the immediately There won't be income of the significant volume incremental volume because we have been supplying the essentially supplying that product anyway. But as we look at continuing to grow the share of that build homes across South America, best for we see the strategic fit.
And so this is a long-term play will be happy to speak to it as you'll have quarter to quarter as we get further into it. But I'm materially it won't. It won't impact what we're doing this quarter are probably next year, pretty volatile. Okay. Thanks very much. I'll turn it back.

Operator

Thank you. Our next question comes from Mark Weintraub of Seaport Research Partners. Your line is now open.

Mark Weintraub

Thank you. Congrats on another very good quarter. So what I was hoping to get a little more color on it. If we look at that 17% volume increase that you're projecting for siding year over year, is it possible to give us a sense as to what it looks like in their categories are in our single-family sheds?

Brad Southern

Yes. So let me just say directionally, the strength has been in new construction and R&R that is driven essentially all of this growth above trend line. We had a bit on the retail business has been okay, so let's just say about average and then share has been flat this year.
And so the strength has certainly been in new construction and repair and remodel. And it's been around I mean, our prime business has been phenomenal, but the builder series and expert finish granted off a smaller base goes growth 2%. We've been a significant upside to the year.

Mark Weintraub

And then, Brad, how much is there a way that you can assess how much is a function of and that same store sales growth versus your you're expanding distribution base?

Brad Southern

Yes. So let me take that bus segment.
So for new construction on. But having having the big builder credibility that's come along with some of these deals that we've been able to to get to this year does bring around not necessarily but were not net, not two-step distribution ads, but it does bring lumberyard adds in the geographic areas.
We're gaining new business with a bit over. So that kind of new new new lumber yard distribution is incremental. And and that usually means to an inventory build small inventory build because these aren't to steppers, but it's an inventory build and then pull through and ancillary sales, the to the customer that we aim.
But also if you've got placement at the lumber yard, you're getting sales to other builders and contractors that that existed and didn't have access to the product before. So that has been an important part of the story this year for new construction and then repair remodel, that is that metering contractor.
Okay. Sorry, securing a contractor loyalty is a big part of what we're doing with these incremental marketing and sales spans. But that also is accompanied by continued growth in our one-step distribution of geographic, some channel.
It's a channel exposure and so on. That has been something that we are coming out of allocation. We've really been focused on. So So their cloud, we're gaining market share ultimately with with contractors and R&R and builders in new construction, there is the added benefit somewhat necessary on reality of adding distribution as we go along.

Mark Weintraub

And as you think about maybe where you are in the lifecycle of that process, it is next year potentially gain also benefit significantly from this? Or maybe how should we be thinking about these two drivers almost the single stores versus the expanded base?

Brad Southern

Our R&R, Tom, I would say we're still underexposed enough to where we will continue to add one-step distribution locations through as expert fish and becomes more available through our capacity expansion.
That will be a significant part of our growth for the mark probably for the next several years as we grow that market share into into go because we still have pockets of geographical weakness where we don't have strong distribution there.
And then for new construction or for the traditional channel to market to to new construction. I think that will be locally sized around a regional wins with a big builder and and then the necessary lumber yard ads that have to go to support those wins. So that might not be quite as significant as landing L&R has been this year to that. But there still is opportunities for further penetrate operation within the channel in both those areas.

Mark Weintraub

I appreciate it. I'll leave it there. Thank you.

Brad Southern

Thanks.

Operator

Thank you. Our next question comes from Ketan Mamtora of BMO Capital Markets. Your line is now open.

Ketan Mamtora

Good morning and congrats on a strong quarter, especially in siding on maybe just sticking with the siding expansion that in the past, you've also talked about, you know, the product categories that inciting vacancy growth would also be one of the factors in deciding May.
We'll expand capacity. Is that, Daniel, one of the factors are, is that becoming less of a factor given your size now?

Brad Southern

No, that's a good point. That is a factor. And as some as you know, Ketan, some of the mills that we have converted Dawson in particular, I know I'm sorry. So on this one mill answer gold mill or have large presses that are conducive to panel production for Holton was a smaller mill, more conducive to lap and trim and softer production.
And so when I speak of those opportunities around the press size and around the location, we we'll be looking at the skew of distribution, a portfolio profile as we make the decisions the more the more we are looking at lap and trim as where we need volume, Bill less appealing a larger press size maybe to us.
And the more that may swing us back to up adding a press line of kind of a specialized press line at an existing facility. So it so that is certainly a factor. And just given all we've talked about health and the last few calls in this call, in particular, the growth really is in lap and trim more so than in panel right now now, which would kind of push us to a more specialized setup as far as the next mill conversion.

Ketan Mamtora

All right.
That's a that's a helpful. And then just one more on siding outside of the seasonality. And Brad, as you look at kind of demand in our factories, are drivers, are you seeing kind of anything as you move to Q3. And October? It's things that either are starting to look a little bit better in terms of new order activity are kind of sell the same and uncertainty? Or how would you characterize in terms of in a tough activity?

Brad Southern

I would say activity has been good, okay, to good this slide, in the season course, weather, weather patterns have been warm across the country, so that certainly helped.
But Ketan, it feels like pre-COVID, like a pre COVID solid year order for us, but stayed steady throughout the fall so far. And I'm going to how we've been able to took from from the visibility we have had inventories in the channel, see kind of like, as we mentioned, normal normal inventories. So I mean, it's just been a really, really solid year across the board.
And we're in we're continuing to see given the season that we're in, you know, a nice order file. And I don't really don't see that being a ton of risk to that given the price increase that we have announced now. So we feel good as we I mean, as we've reflected in our in our guidance about the rest of the year. And as we get closer to next year, we're feeling better and better about what we are able to execute to next year.

Ketan Mamtora

That's a helpful to have good luck, and I lead them back into queue. Thank you.

Operator

Our next question comes from Kurt Yinger of D.A. Davidson. Your line is now open.

Kurt Yinger

Great, thanks and good morning, everyone.
And without trying to pin you down on 2025 guidance, I'm curious with the visibility you have on the builder series and take builder side and some of the expanded stocking position you've discussed.
How does that play into your thoughts are around now our goal or potential level of kind of market outperformance as we look into next year. But then the Siding business?

Brad Southern

Well, you know, if you look at the outlook for single-family, new construction starts next year is flat, that we're not we're not planning to be flat. And so I think the momentum that we're that we've generated this year having the capacity and being off allocation, we're feeling better and better about next year. I mean, there's all kind of got political risk.
We've got a tariff risk. I mean, there's all there's all kind of potential headwinds, but we feel like the value proposition for our product is very strong as we continue to gain exposure. The field with the contractors and builders that credibility around the product offering is beginning to is growing as well.
And so, you know, I'm I feel like kind of pre-COVID growth rates on that we've had that we enjoy the 8% to 10% is certainly something we should be able to execute to. I mean, I'm not guiding for next year, but that would be the kind of historical pattern we've had and we'll get more specific about it on the next on the next call. But I feel good about that, but we'll have to take a good, solid look at the headwinds that we that we what we see over the next two or three months as we make that call for for how we guide next year.

Kurt Yinger

Right, right. No, I appreciate that. And on the comment on value proposition and kind of ties into my next question, clearly, we haven't seen it at all yet.
But with the affordability challenges and efforts by builders to kind of take cost out, does that change the dynamic for premium materials like your own and conversion from maybe less expensive substrates? And we've seen historically, I'm just curious if you have any high-level thoughts around that in the current backdrop.

Brad Southern

Yes.
The affordability, I think does play a little bit to the strength of vinyl siding. It ultimately just purely a cost play. Vinyl siding is the products that have a contractor builders to choose. But you know, when you have things like pre are prefinished siding now which expert finished is going into new construction.
So you eliminate the painting step in new construction that can be that can help the affordability of a home. And then I don't know as we the labor savings that has realized from and was primarily the labor savings that is realized by using a smart side versus all other substrates can be is real.
And as builders and contractors experienced the product, they they realize that and that's what strengthens the value proposition that I spoke to earlier. That makes us confident that at this point penetration that we've been enjoying the past 12 months or something that we can grow off of next year.

Kurt Yinger

Right. Okay. And mix, that makes sense. And just to squeeze one more on, Alan, in terms of Q3 to Q4 styling EBITDA on, could you maybe just level set on kind of a one-time maintenance, our Project Impact kind of embedded within that?

Alan Haughie

Yes, yes, I'll do it then I'll do it with reference to Q2 three, though, I'm going to cause sort of put a setup in my prepared remarks.
If you take $123 million from Q3, there was about $5 million in that that we had intended to one-time costs and inventory days reduction that we intended to do in in Q4.
We did we did in Q3, we did the opposite in Q three satellites have shipped $5 million between those two, right? So I'm going to take 123 now call five from Q3 and get 118. I'm going to take that five and added on to the midpoint of our range for Q4, which could be 75 plus five.
So $80 million lives is about $38 million. To explain about $30 million of that would be the impact of the lower volume in from Q3 to Q4. And the balance, call it 8 to 10 million is the one-time think of it as the one-time maintenance costs and mill downtime that we that we as a matter of necessity, we have to take to perform the necessary maintenance and into Q4, and that's the principal difference.
Also, if you didn't ask between the Q4 EBITDA in Q1, EBITDA of a similar revenue levels, but a lower EBITDA because in Q1 of this year, we were not taking that downtime and building inventory. And in Q4, we're taking that necessary downtime and depleting inventory.
So you get that sort of both double double whammy for from a negative absorption on inventory as well as the necessary downtime.

Kurt Yinger

Got it. Okay.

Alan Haughie

So there are such that we should call it 25. So I spoke earlier.

Operator

Thank you. And I'm showing no further questions at this time. I would like to turn it back to management for closing remarks.

Alan Haughie

Okay. Operator, thank you very much, and thank you, everyone, for joining us. With no further questions, we'll bring the call to a close. Everyone stay safe, and we'll look forward to seeing you again next quarter.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Okay.