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ArmstrongInvestmentResearch.com

January 4th, 2018

James Armstrong

W: 917.410.7046

C: 614.353.7373

Companies Detailed

Louisiana-Pacific Corporation (LPX)

Rating: Buy
Target: $32.00
Last Close (1/3/2018): $27.60
Market Capitlization: $3,998 Million
Average Volume: 1,678 k

Norbord Inc. (OSB-TSE)

Rating: Buy
Target: $51.00
Last Close (1/3/2018): $43.69
Market Capitlization: $3,775 Million
Average Volume: 270 k

Oriented Strand Board

Even With Precipitous Fall in November, OSB Prices Beat Expectations

North Central OSB Averages $379 in 4Q – Cleaning up our models before earnings, we find that even though OSB prices fell like a rock in November as the industry caught up with hurricane demand, prices for North Central 7/16-inch OSB still came in $31 higher than we had previously anticipated. Furthermore, prices started out high and fell during the quarter, meaning that the lag effect that most producers experienced in the third quarter should reverse in the fourth.

Raising 4Q and 2017 Estimates for Norbord and Louisiana Pacific – Because of the better than anticipated pricing, we are raising our fourth quarter forecast on Louisiana-Pacific by 10-cents to $0.62. Furthermore, we are raising our Norbord forecast by 30-cents to $1.23. However, only 10-cents of our 30-cent increase in Norbord is due to higher OSB prices. 5-cents of the remaining are due to better margin assumptions from the company’s European business and 15-cents are due to a lower than previously modeled tax rate.

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Analyst Certification:

I, James Armstrong, certify that all the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. I also certify that I have no financial interest in the debt or equity securities of the subject company(ies) including, without limitation, options, rights, warrants, futures, long or short positions.

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Explanation of Armstrong Investment Research L.L.C. Ratings

Buy – Describes securities that we expect to provide a total return (price appreciation plus yield) of 10% or more within a 12-month period (unless specified otherwise

Hold – Describes securities that we expect to provide a total return (price appreciate plus yield) between plus 10% and minus 10% within a 12-month period.

Sell – Describes securities that we expect to provide a total return (price appreciate plus yield) of minus 10% or less within a 12-month period.

CS – Coverage Suspended. Armstrong Investment Research L.L.C. has suspended coverage of this company.

NC – Not covered. Armstrong Investment Research L.L.C. does not cover this company.

Valuation Methodology

Armstrong Investment Research L.L.C.'s methodology for assigning ratings may include the following: market capitalization, maturity, growth/value, volatility and expected total return over the next 12 months. The price targets are based on several methodologies, which may include, but are not restricted to, analyses of market risk, growth rate, revenue stream, discounted cash flow (DCF), EBITDA, EPS, cash flow (CF), free cash flow (FCF), EV/EBITDA, P/ E, PE/growth, P/CF,P/FCF, premium (discount)/average group EV/EBITDA, premium (discount)/average group P/E, sum of the parts, net asset value, dividend returns, and return on equity (ROE) over the next 12 months

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Notes: Each box in the Rating and Price Target History chart above represents actions over the past three years in which an analyst initiated on a company, made a change to the rating or price target of a company or discontinued coverage of a company.

Legend:

I: Initiating Coverage

D: Dropping Coverage

B: Buy

H: Hold

S: Sell

NR: Not Rated

CS: Coverage Suspended

NC: Not Covered

N/A: Not Applicable

Distribution of Ratings (As of 1/2/2018)

Coverage Universe

Rating   Count     Percent

Buy        6              40%

Hold       8              53%

Sell         1              7%

Investment Banking Clients Past 12 Months

Rating   Count     Percent

Buy        0              N/A

Hold       0              N/A

Sell         0              N/A

Other Disclosures

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