What happened

Slowing demand for building products and choppy pricing ate into Louisiana-Pacific's (LPX -0.33%) second-quarter results, and investors are clearly disappointed. Shares of the wood products company fell by more than 14% on Wednesday following the earnings release, and were down by 13% as of 1:20 p.m. ET.

So what

Louisiana-Pacific reported adjusted second-quarter earnings of $0.55 per share on revenue of $611 million, falling short of analysts' consensus estimates of $0.66 per share on sales of $665 million. Net sales decreased by 46% year over year, driven by lower volumes and average selling prices for the company's oriented strand board.

Oriented strand board net sales decreased by 66%, while siding solutions net sales were down by 11%. The company also took a charge related to its exit from an off-site framing operation and recorded a settlement of patent-related claims.

The company produced $88 million in cash in the quarter from operating activities while funding $74 million in capital expenditures and $17 million in cash dividends. Louisiana-Pacific ended the quarter with $71 million in cash on its balance sheet.

Now what

"As the housing outlook continues to improve, I am confident LP's strategy positions us well for long-term growth," CEO Brad Southern said in the earnings release.

The question for investors is how long that recovery will take. Louisiana-Pacific said it expects oriented strand board revenue in the current quarter to be sequentially higher by at least 50% and for siding revenue to continue to be sluggish, forecasting third-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in a range of $160 million to $180 million. By comparison, adjusted EBITDA came in at $93 million in the second quarter.

Even with Wednesday's declines, Louisiana-Pacific shares are still up 11% year to date and up 148% since mid-2018. There's room for expansion here should the U.S. economy and the housing market hold up in the quarters to come, but given the uncertainty, investors are having a hard time getting excited about this stock now.