Louisiana-Pacific delivered the quarter siding bulls needed. Adjusted EPS of $0.39 beat the $0.21 consensus by 30.0% and cleared the $0.30 Earnings Whisper, while revenue of $691.0 million topped the $674.25 million estimate by 2.5%. More importantly, the direction of growth changed. Adjusted earnings grew 8.3% and revenue grew 4.2% year over year, a sharp break from a nine-month period in which sales fell from $2.14 billion to $1.93 billion and adjusted EPS dropped from $2.76 to $1.17. SmartSide drove the turn, posting record net sales of $473 million, up 7%, and returning to positive unit growth. That is the central development. The central tension is that the profit pool did not expand alongside the top line, and the fourth-quarter outlook points to a tougher stretch before 2027 pricing arrives.
The quality of the beat deserves scrutiny. Consolidated adjusted EBITDA was flat at $82 million, and gross profit fell to $114 million from $129 million as cost of sales rose faster than revenue. The EPS upside came largely from below the gross line. SG&A fell to $76 million from $95 million, and stock-based compensation was halved to $6 million. OSB's loss narrowed to $24 million from $27 million only because of $14 million in lower inventory reserve adjustments, a benefit management expects to fall away. GAAP EPS of $0.32 versus $0.13 looks more impressive than it is, because the year-ago quarter carried a $13 million impairment. Cash generation was a genuine positive. Operating cash flow rose to $112 million on an inventory drawdown, and cash climbed to $265 million from $228 million at the end of the second quarter.
Beneath the headline, siding's trajectory clearly improved. Volume rose 2% after declines of 18% in the first quarter and 11% in the second. Revenue beat the $460-470 million guide management set in the second quarter. ExpertFinish distributor sell-through rose 8% year over year and 13% sequentially, and management characterized channel inventories as lean and fourth-quarter orders as true end-use demand. Margins tell a less flattering story. Segment EBITDA of $119 million, roughly a 25% margin, rose just $2 million, as $23 million of net price gains were mostly absorbed by $19 million of raw material, freight and labor inflation. Full-year ExpertFinish shipments are now expected to be roughly flat, versus the mid-single-digit growth guided earlier in the year.
Guidance improved at the margin. Full-year siding revenue is now $1.66-1.67 billion, with the low end raised, and siding EBITDA is $415-425 million. The full-year OSB loss estimate improved to about $95 million from $120 million, and consolidated EBITDA guidance is $270-280 million. The fourth quarter is the soft spot. Management guided siding to $390-400 million in revenue and $80-90 million in EBITDA, about a 22% margin, which is below normal seasonality. It also expects siding price-cost to turn negative on MDI resin, paper overlay and freight inflation. OSB's loss is expected to deepen to roughly $35 million, which helps explain why consolidated fourth-quarter EBITDA is guided to just $30-40 million. Management framed the siding guide as deliberate conservatism after last year's fourth-quarter pull-forward.
The catalysts lean toward 2027. The overhauled SmartSide distribution network, anchored by Specialty Building Products plus exclusive regional partners, adds more than 100 locations and a sales force larger than LP's own. Taylor Morrison's vendor award bundles siding and OSB, and a 2027 list increase is expected to net about 3.5-4% from January. Management pointed to promising builder and manufactured-housing RFPs and a strong start to 2027. Bears have legitimate ammunition as well. The Jasper OSB mill was curtailed indefinitely and Maniwaki was idled temporarily, single-family starts are still declining, and mortgage rates are pressuring builders. The distribution changeover adds two to three quarters of inventory load-in noise.
Investor sentiment became meaningfully more positive heading into the report, rising from 0.05 to 0.33. The stock, however, has gone nowhere on net. At $75.58, it was up just 0.8% from the open after the August report and sat 0.5% above its 200-day average. That flat result masks a round trip: shares slid to a 52-week low of $62.18 on October 1, then rallied 21.6% to sit 4.9% below the quarter's high. AVWAP readings are positive while other trend signals are neutral, consistent with a stock that has repaired damage rather than broken out.
The bottom line is that Louisiana-Pacific proved SmartSide demand has turned, beating estimates and posting its first siding volume growth of the year. Even so, flat EBITDA, a non-recurring OSB inventory benefit and a below-seasonal fourth-quarter guide mean the earnings recovery is still a 2027 story built on pricing, distribution gains and cost relief.