What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-06 · 74 added, 60 removed, 226 unchanged (37% of the section changed)

12 unchanged sentences

Demand for our products correlates positively with new home construction and repair and remodeling activity in North America, which historically has been characterized by significant cyclicality.

Census Bureau reported on July 18, 2025, that actual single-family housing starts were 9% and 7% lower, respectively, for the three and six months ended June 30, 2025, as compared to the same periods in 2024.

Actual multi-family housing starts for the three and six months ended June 30, 2025, were 22% and 17% higher, respectively, as compared to the same periods in 2024.

Census Bureau published actual U.S.

housing starts data on September 17, 2025.

September 2025 housing starts have not yet been published by the U.S.

Census Bureau, and therefore, we have calculated September housing starts as the average of July and August 2025 actual housing starts.

Actual single-family housing starts were approximately 4% and 5% lower, respectively, for the three and nine months ended September 30, 2025, as compared to the same periods in 2024.

Actual multi-family housing starts for the three and nine months ended September 30, 2025, were approximately 24% and 20% higher, respectively, as compared to the same periods in 2024.

Repair and remodeling activity is difficult to reasonably measure, but the general sentiment among repair and remodeling contractors is more cautious than expected earlier in the year.

2 unchanged sentences

The international trade landscape has been extremely volatile in recent periods.

government has recently announced significant changes to U.S.

trade policy, including the implementation or planned imposition of new or increased tariffs on a broad range of goods imported from international markets, including Canada and China, as well as the potential modification or termination of existing trade agreements between the U.S.

Earlier this year, the U.S.

government announced significant changes to U.S.

trade policy, including the implementation or planned imposition of new or increased tariffs and trade barriers on a broad range of goods imported from international markets, including Canada and China, as well as the potential modification or termination of existing trade agreements between the U.S.

and certain other countries.

4 unchanged sentences

Further, changing trade policy in the U.S.

and other countries, particularly Canada and China, could increase the cost of certain raw materials or components that are critical to our manufacturing process, which could have a material negative impact on our manufacturing costs and our overall financial performance.

and other countries, particularly Canada and China, could continue to increase the cost of certain raw materials or components that are critical to our manufacturing process, which could have a material negative impact on our manufacturing costs and our overall financial performance.

While we are actively exploring opportunities to mitigate these increased costs, there can be no guarantee that we will be able to achieve successful mitigation strategies or meaningfully offset the financial impact of new or increased tariffs, or other adverse changes to trade policy, in the U.S.

or other countries.

In the six months ended June 30, 2025, our cost of sales in the Siding segment was negatively impacted by $5 million related to new or increased tariffs.

In the nine months ended September 30, 2025, our cost of sales in the Siding segment was negatively impacted by $7 million related to new or increased tariffs.

Based on a preliminary analysis of the potential effects of the tariffs that are currently in force in the United States, as well as in other markets where we operate, we estimate that we could incur potential incremental costs of approximately $8 million in 2025, most of which would likely be incurred by the Siding segment.

10 unchanged sentences

Product supply is influenced primarily by fluctuations in available manufacturing capacity and imports.

The ratio of overall OSB demand to capacity generally drives price.

The ratio of overall OSB demand to capacity generally drives prices.

We cannot predict whether the prices of our OSB products will remain at current levels or fluctuate in the future.

10 unchanged sentences

We also disclose net income excluding loss on impairment attributed to LP, business exit credits and charges, product-line discontinuance charges, interest expense outside of normal operations, other operating credits and charges, net, loss on early debt extinguishment, gain (loss) on acquisition, pension settlement charges, income from discontinued operations, net of income taxes, and net income attributed to noncontrolling interest, and adjusting for a normalized tax rate, as Adjusted Income (Adjusted Income), which is a non-GAAP financial measure.

We also disclose Adjusted Diluted EPS, which is calculated as Adjusted Income divided by diluted shares outstanding (Adjusted Diluted EPS).

In addition, we disclose Adjusted Diluted EPS, which is calculated as Adjusted Income divided by diluted shares outstanding (Adjusted Diluted EPS).

We believe that Adjusted Diluted EPS and Adjusted Income are useful measures for evaluating our ability to generate earnings and that providing these measures should allow interested persons to more readily compare the earnings for past and future periods.

7 unchanged sentences

The following table reconciles net income to Adjusted EBITDA (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Net income $ 9 $ 90 $ 154 $ 358

Add (deduct):

Provision for income taxes 9 23 54 117

14 unchanged sentences

Adjusted EBITDA $ 82 $ 153 $ 386 $ 564

The following table provides the reconciliation of net income to Adjusted Income (dollar amounts in millions, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

The following table reconciles net income to Adjusted Income (dollar amounts in millions, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

1 unchanged sentence

Net income $ 9 $ 90 $ 154 $ 358

Add (deduct):

Loss on impairment 13 — 31 —

19 unchanged sentences

Other companies may present housing start data differently, and therefore, as presented by us, our housing start data may not be comparable to similarly titled performance indicators reported by other companies.

The following table sets forth housing starts for the three and six months ended June 30, 2025 and 2024 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The following table sets forth housing starts for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

5 unchanged sentences

housing starts data, in thousands, reported by the U.S.

Census Bureau as published through July 18, 2025.

Census Bureau as published through September 17, 2025.

September 2025 housing starts have not yet been published by the U.S.

Census Bureau, and therefore, we have calculated September housing starts as the average of July and August 2025 actual housing starts.

We monitor sales volumes for our products in our Siding, OSB, and LPSA segments, which we define as the amount of our products sold within the applicable period measured in million square feet (MMSF) on a standard 3/8" thickness basis.

2 unchanged sentences

We believe that sales volumes can be a useful measure for evaluating and understanding our business.

The following table sets forth sales volumes for the three and six months ended June 30, 2025 and 2024 (in MMSF):

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

The following table sets forth sales volumes for the three and nine months ended September 30, 2025 and 2024 (in MMSF):

Three Months Ended September 30, 2025 Three Months Ended September 30, 2024

Sales Volume Siding OSB LPSA Total Siding OSB LPSA Total

5 unchanged sentences

— 376 — 376 — 431 — 431

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

Sales Volume Siding OSB LPSA Total Siding OSB LPSA Total

5 unchanged sentences

— 1,232 — 1,232 — 1,261 — 1,261

We measure Overall Equipment Effectiveness (OEE) of each of our mills to track improvements in the utilization and productivity of our manufacturing assets.

We measure OEE of each of our mills to track improvements in the utilization and productivity of our manufacturing assets.

OEE is a composite metric that considers asset uptime (adjusted for capital project downtime and similar events), production rates, and finished product quality.

2 unchanged sentences

It should be noted that other companies may present OEE data differently, and therefore, as presented by us, OEE data may not be comparable to similarly titled measures reported by other companies.

OEE for the three and six months ended June 30, 2025 and 2024, for each of our segments is listed below:

Three Months Ended June 30, Six Months Ended June 30,

OEE for the three and nine months ended September 30, 2025 and 2024, for each of our segments is listed below:

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

9 unchanged sentences

Segment net sales and Adjusted EBITDA for this segment were as follows (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 % Change 2025 2024 % Change

2 unchanged sentences

Net sales in this segment by product line were as follows (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 % Change 2025 2024 % Change

2 unchanged sentences

Total $ 443 $ 420 5 % $ 1,305 $ 1,196 9 %

Percent changes in average net sales prices and unit shipments for the three and six months ended June 30, 2025, compared to the corresponding periods in 2024, were as follows:

Percent changes in average net sales prices and unit shipments for the three and nine months ended September 30, 2025, compared to the corresponding periods in 2024, were as follows:

Three Months Ended

June 30, 2025 versus 2024 Six Months Ended

June 30, 2025 versus 2024

September 30, 2025 versus 2024 Nine Months Ended

September 30, 2025 versus 2024

Selling Price Unit

2 unchanged sentences

Siding Solutions 5 % — % 3 % 6 %

For the three and six months ended June 30, 2025, Siding net sales increased year-over-year by $45 million and $86 million, respectively, reflecting higher sales volumes and higher selling prices.

ExpertFinish net sales increased by 17% and 20% for the three and six months ended June 30, 2025, respectively, compared to the prior-year periods.

Adjusted EBITDA for the Siding segment increased by $20 million and $36 million for the three and six months ended June 30, 2025, respectively, compared to the prior-year periods.

This growth was driven by higher sales volume and strong pricing, partially offset by strategic investments in sales and marketing—$2 million in the quarter and $7 million year to date—as well as tariff expenses of $3 million for the quarter and $5 million year to date.

The OSB segment manufactures and distributes OSB structural panel products, including the innovative value-added OSB product portfolio known as LP ® Structural Solutions (which includes LP ® TechShield ® Radiant Barrier, LP WeatherLogic ® Air & Water Barrier, LP Legacy ® Premium Sub-Flooring, LP NovaCore ® Thermal Insulated Sheathing, LP ® FlameBlock ® Fire-Rated Sheathing, LP ® TopNotch ® 350 Durable Sub-Flooring) and LP ® Oriented Strand Board.

For the three and nine months ended September 30, 2025, Siding net sales increased year over year by $22 million and $108 million, respectively, reflecting higher selling prices.

The nine-month increase also included a benefit from higher sales volume.

Within the Siding segment, ExpertFinish ® net sales increased by 31% and 24% for the three and nine months ended September 30, 2025, respectively, compared to the prior-year periods.

Adjusted EBITDA for the Siding segment decreased year over year by $6 million for the three months ended September 30, 2025, with improved pricing of $18 million more than offset by $13 million mill overhead and inventory absorption, $5 million of strategic investments in sales and marketing, $3 million of SG&A, and $2 million of tariff expenses.

Adjusted EBITDA increased $30 million for the nine months ended September 30, 2025, compared to the prior-year period.

This growth was driven by higher sales volume and higher selling prices of $70 million, partially offset by strategic investments in sales and marketing of $12 million, $13 million of mill overhead and inventory absorption, $7 million of tariff expenses, and $5 million of SG&A.

The OSB segment manufactures and distributes OSB structural panel products, including the innovative value-added OSB product portfolio known as LP ® Structural Solutions (which includes LP ® TechShield ® Radiant Barrier Sheathing, LP WeatherLogic ® Air & Water Barrier, LP Legacy ® Premium Sub-Flooring, LP ® FlameBlock ® Fire-Rated Sheathing, and LP ® TopNotch ® 350 Durable Sub-Flooring) and LP ® Oriented Strand Board.

Segment net sales and Adjusted EBITDA for this segment were as follows (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 % Change 2025 2024 % Change

2 unchanged sentences

Net sales in this segment by product line were as follows (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 % Change 2025 2024 % Change

3 unchanged sentences

Total $ 179 $ 253 (29) % $ 696 $ 917 (24) %

Percent changes in average net sales prices and unit shipments for the three and six months ended June 30, 2025, compared to the corresponding periods in 2024, were as follows:

Percent changes in average net sales prices and unit shipments for the three and nine months ended September 30, 2025, compared to the corresponding periods in 2024, were as follows:

Three Months Ended

June 30, 2025 versus 2024

Six Months Ended

June 30, 2025 versus 2024

September 30, 2025 versus 2024

Nine Months Ended

September 30, 2025 versus 2024

Selling Price Unit

3 unchanged sentences

OSB - commodity (28) % (13) % (24) % (2) %

For the three and six months ended June 30, 2025, OSB net sales decreased by $101 million and $147 million, respectively, compared to the same prior-year periods.

These decreases were primarily driven by lower OSB prices.

Adjusted EBITDA for the OSB segment for the same periods decreased year-over-year by $106 million and $143 million, respectively, also reflecting the impact of lower OSB prices.

For the three and nine months ended September 30, 2025, OSB net sales decreased year over year by $74 million and $221 million, respectively.

These decreases were primarily driven by lower OSB prices and a decline in sales volume.

Adjusted EBITDA for the OSB segment for the same periods decreased year over year by $60 million and $203 million, respectively, also reflecting the impact of lower OSB prices and a decline in sales volume.

The LPSA segment manufactures and distributes OSB structural panel and Siding Solutions products in South America and certain export markets.

2 unchanged sentences

Segment net sales and Adjusted EBITDA for this segment were as follows (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 % Change 2025 2024 % Change

1 unchanged sentence

Adjusted EBITDA 5 9 (50) % 25 29 (13) %

For the three months ended June 30, 2025, net sales and Adjusted EBITDA declined year-over-year by $3 million and $1 million, respectively, primarily due to lower OSB prices.

For the six months ended June 30, 2025, net sales and Adjusted EBITDA increased by $2 million and $1 million year-over-year, respectively, driven by higher Siding volume and prices partially offset by lower OSB prices.

For the three and nine months ended September 30, 2025, net sales decreased year over year by $8 million and $6 million, respectively, primarily due to lower OSB prices.

For the three and nine months ended September 30, 2025, Adjusted EBITDA decreased by $5 million and $4 million year over year, respectively, primarily due to lower OSB prices.

Our other products segment includes other minor products, services, and closed operations, which do not qualify as discontinued operations.

1 unchanged sentence

During 2024, the equity method investment held by Entekra Holdings LLC, our off-site framing operation, sold substantially all of its net assets.

Other net sales were $2 million and $4 million for the three and six months ended June 30, 2025, respectively, as compared to $2 million and $5 million for the corresponding periods in 2024, respectively.

Adjusted EBITDA was $(10) million and $(20) million for the three and six months ended June 30, 2025, respectively, as compared to $(11) million and $(19) million for the corresponding periods in 2024, respectively.

Other net sales were $2 million and $6 million for the three and nine months ended September 30, 2025, respectively, as compared to $2 million and $7 million for the corresponding periods in 2024, respectively.

Adjusted EBITDA was $(13) million and $(33) million for the three and nine months ended September 30, 2025, respectively, as compared to $(12) million and $(32) million for the corresponding periods in 2024, respectively.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $79 million and $154 million for the three and six months ended June 30, 2025, respectively, compared to $71 million and $140 million for the corresponding periods in 2024, respectively.

The year-over-year increase in selling, general, and administrative expenses for both periods was driven by higher employee compensation.

We recognized an estimated tax provision of $19 million and $45 million in the three and six months ended June 30, 2025, respectively, as compared to $53 million and $94 million for the comparable periods in 2024, respectively.

Selling, general, and administrative expenses were $95 million and $250 million for the three and nine months ended September 30, 2025, respectively, compared to $75 million and $215 million for the corresponding periods in 2024, respectively.

The year-over-year increase in selling, general, and administrative expenses for both periods was primarily driven by higher employee compensation.

We recognized an estimated tax provision of $ 9 million and $ 54 million in the three and nine months ended September 30, 2025, respectively, as compared to $ 23 million and $ 117 million for the comparable periods in 2024, respectively.

Each quarter the income tax accrual is adjusted to the latest estimate and the difference from the previously accrued year-to-date balance is recorded in the current quarter.

For the six months ended June 30, 2025, and 2024, the primary differences between the U.S.

statutory rate of 21% and the total effective tax rates of 26% and 25%, respectively, relate to state income tax and inflationary and foreign currency exchange adjustments.

For the nine months ended September 30, 2025, the primary difference between the U.S.

statutory rate of 21% and the total effective tax rate of 26 % relates to state income tax and non-deductible compensation.

For the nine months ended September 30, 2024, the primary difference between the U.S.

statutory rate of 21% and the total effective tax rate of 25 % relates to state income tax.

Legal and Environmental Matters

14 unchanged sentences

Operating Activities

During the six months ended June 30, 2025 and 2024, cash provided by operations was $226 million and $317 million, respectively.

During the nine months ended September 30, 2025 and 2024, cash provided by operations was $315 million and $500 million, respectively.

The decrease in cash provided by operations was primarily related to lower net income and changes in working capital.

Investing Activities

During the six months ended June 30, 2025 and 2024, cash used in investing activities was $132 million and $61 million, respectively, relating to capital expenditures.

During the nine months ended September 30, 2025 and 2024, cash used in investing activities was $216 million and $122 million, respectively, relating to capital expenditures.

The year-over-year increase in capital expenditures was primarily related to higher spend on growth and sustaining maintenance projects in the current year.

2 unchanged sentences

Financing Activities

During the six months ended June 30, 2025, cash used in financing activities was $105 million, which includes $61 million to repurchase shares of LP common stock under the 2024 Share Repurchase Program (defined below) in the three months ended March 31, 2025.

During the nine months ended September 30, 2025, cash used in financing activities was $124 million, which included $61 million for share repurchases of LP common stock under the 2024 Share Repurchase Program (defined below) in the three months ended March 31, 2025.

Additionally, we paid cash dividends of $58 million and used $3 million to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

In connection with other financing activities, we paid $2 million of debt issuance costs related to the amendment of our credit facility.

During the six months ended June 30, 2024, cash used in financing activities was $157 million, which includes $115 million to repurchase shares of LP common stock under the share repurchase program authorized by LP's Board of Directors in May 2022.

During the nine months ended September 30, 2024, cash used in financing activities was $252 million, which included $188 million for share repurchases of LP common stock under the share repurchase program authorized by LP’s Board of Directors in May 2022.

Additionally, during this period we had $56 million of dividend payments and $8 million of stock repurchases from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

1 unchanged sentence

In November 2022, LP entered into the Credit Agreement with American AgCredit, PCA, as administrative agent, CoBank, ACB, as letter of credit issuer, and the lenders and the guarantors from time to time party thereto relating to its revolving credit facility.

On March 26, 2025, LP entered into the First Amendment with American AgCredit, PCA, as administrative agent, CoBank, ACB, as letter of credit issuer, and the lenders and voting participants party

thereto, which amended the Credit Agreement (the Amended Credit Agreement) to (1) increase the aggregate principal amount for the credit facility from $550 million to $750 million, (2) increase the sub-limit for letters of credit from $60 million to $75 million, (3) change the interest rate for revolving borrowing, (4) change the capitalization ratio limit, and (5) extend the maturity date to March 26, 2032.

As of June 30, 2025, there were no outstanding borrowings under the Amended Credit Facility.

On March 26, 2025, LP entered into the First Amendment with American AgCredit, PCA, as administrative agent, CoBank, ACB, as letter of credit issuer, and the lenders and voting participants party thereto, which amended the Credit Agreement (the Amended Credit Agreement) to (1) increase the aggregate principal amount for the credit facility from $550 million to $750 million, (2) increase the sub-limit for letters of credit from $60 million to $75 million, (3) change the interest rate for revolving borrowing, (4) change the capitalization ratio limit, and (5) extend the maturity date to March 26, 2032.

As of September 30, 2025, there were no outstanding borrowings under the Amended Credit Facility.

The Amended Credit Agreement contains various restrictive covenants and customary events of default.

2 unchanged sentences

, funded debt less unrestricted cash to total capitalization) of no more than 65%.

As of June 30, 2025, we were in compliance with all financial covenants under the Amended Credit Agreement.

As of September 30, 2025, we were in compliance with all financial covenants under the Amended Credit Agreement.

In May 2024, LP entered into a new letter of credit facility agreement, replacing the letter of credit facility agreement dated May 2020.

3 unchanged sentences

All amounts outstanding under the Letter of Credit Facility become due on April 15, 2029.

As of June 30, 2025, we were in compliance with all covenants under the Letter of Credit Facility.

As of September 30, 2025, we were in compliance with all covenants under the Letter of Credit Facility.

Other Liquidity Matters

Off-Balance Sheet Arrangements

As of June 30, 2025, we had standby letters of credit of $14 million outstanding related to collateral for environmental impact on owned properties, a deposit for a forestry license, and insurance collateral, including workers' compensation.

As of September 30, 2025, we had standby letters of credit of $14 million outstanding related to collateral for environmental impact on owned properties, a deposit for a forestry license, and insurance collateral, including workers’ compensation.

Potential Impairments

4 unchanged sentences

As a result, impairment charges may be necessary in connection with such dispositions.

During the second quarter of 2025, $17 million in non-cash, pre-tax impairment charges were recorded.

During the third quarter ended September 30, 2025, $13 million in non-cash, pre-tax impairment charges were recorded related to equipment that will not be utilized in future operations.

During the second quarter ended June 30.

2025, $17 million in non-cash, pre-tax impairment charges were recorded.

These included $11 million related to acquired equipment that will not be utilized in future operations, $4 million related to property, plant, and equipment associated with a facility closure, and $2 million primarily related to an operating lease asset associated with a previously closed facility.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis