Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Condensed Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q. The following discussion includes statements that are forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. See "Cautionary Statement Regarding Forward-Looking Statements."
General
We are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide. We have leveraged our expertise serving the new home construction, repair and remodeling, and outdoor structures markets to become an industry leader known for innovation, quality, and reliability. Our manufacturing facilities are located in the U.S., Canada, Chile, and Brazil.
To serve these markets, we operate in four segments: Siding, OSB, EWP, and South America.
During 2021, we ceased Laminated Strand Lumber (LSL) production at our Houlton, Maine facility to begin the conversion of that facility to Siding Solutions (defined below) production. We continue to explore strategic alternatives with respect to the remaining EWP segment, including a possible sale in whole or in part, as previously announced.
During the three months ended March 31, 2022, we sold our 50% equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc. (Resolute) for $59 million. The joint ventures were comprised of Resolute-LP Engineered Wood Larouche Inc. in Larouche, Quebec, and Resolute-LP Engineered Wood St-Prime Limited Partnership in Saint-Prime, Quebec. The total net carrying value of our equity method investment at the date of sale was $19 million. We recognized a gain on the sale of $39 million in the three-month period ended March 31, 2022, within Other operating credits and charges, net, in the Condensed Consolidated Statements of Income. The Condensed Consolidated Statements of Income for the three months ended March 31, 2022 and 2021 include income from these joint ventures of $5 million and $2 million, respectively. In connection with the closing of the sale of our equity interest in the joint ventures, LP entered into separate agreements with Resolute to continue serving as the exclusive distributor of the engineered wood products manufactured at the two operations.
Demand for our Building Products
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. The U.S. Department of Census reported on April 19, 2022, that actual single housing starts were 3% higher for the three months ended March 31, 2022, as compared to the same period in 2021. Repair and remodeling activity is difficult to reasonably measure, but many indications, including the increase in LP’s retail sales, suggest that repair and remodeling activity is continuing to grow.
Although housing market demand has recently been very strong, future economic conditions in the United States and the demand for homes remain uncertain due to continuing COVID-19-related disruptions, government directives, actions and economic relief efforts related thereto, and the impact of these actions on the economy, employment levels, consumer confidence, and financial markets, among other things. Additionally, as a result of increased demand in the housing market and a strengthening economy in the United States, we have experienced increases in material prices, supply disruptions, and labor shortages, which will be a challenge for LP as we continue to work to meet the demands of builders, remodelers, and homeowners worldwide. The potential effect of these factors on our future operational and financial performance is uncertain. As a result, our past performance may not be indicative of future results.
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Supply and Demand for OSB
OSB is a commodity product, and it is subject to competition from manufacturers worldwide. Product supply is influenced primarily by fluctuations in available manufacturing capacity and imports. The ratio of overall OSB demand to capacity generally drives price. We experienced increased demand for commodity OSB during the three months ended March 31, 2022; however, we cannot predict whether the prices of our OSB products will remain at current levels or increase or decrease in the future.
For additional factors affecting our results, refer to the “Overview” within our “Management's Discussion and Analysis of Financial Condition and Results of Operations” section and our “Risk Factors” section contained in our 2021 Annual Report on Form 10-K, and to the “Cautionary Statement Regarding Forward-Looking Statements” section in this quarterly report on Form 10-Q.
Critical Accounting Policies and Significant Estimates
Note 1 of the Notes to the Condensed Consolidated Financial Statements included in our 2021 Annual Report on Form 10-K is a discussion of our significant accounting policies and significant accounting estimates and judgments. Throughout the preparation of the financial statements, we employ significant judgments in the application of accounting principles and methods. These judgments are primarily related to the assumptions used to arrive at various estimates.
While there have been no changes in the application of principles, methods, and assumptions used to determine our significant estimates since December 31, 2021, we may be required to revise certain accounting estimates and judgments related to the economic and business impact of the COVID-19 pandemic or the invasion of Ukraine by Russia, such as, but not limited to, those related to the valuation of goodwill, intangibles, long-lived assets, accounts receivable, and inventory, which could have a material adverse effect on our financial position and results of operations.
Non-GAAP Financial Measures and Other Key Performance Indicators
In evaluating our business, we utilize non-GAAP financial measures that fall within the meaning of SEC Regulation G and Regulation S-K Item 10(e), which we believe provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP financial measures do not have standardized definitions and are not defined by U.S. GAAP. In this quarterly report on Form 10-Q, we disclose income attributed to LP before interest expense, provision for income taxes, depreciation and amortization, and exclude stock-based compensation expense, loss on impairment attributed to LP, product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, pension settlement charges, and other non-operating items as Adjusted EBITDA (Adjusted EBITDA), which is a non-GAAP financial measure. We have included Adjusted EBITDA in this report because we view it as an important supplemental measure of our performance and believe that it is frequently used by interested persons in the evaluation of companies that have different financing and capital structures and/or tax rates. We also disclose income attributed to LP, excluding loss on impairment attributed to LP, 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, and adjusting for a normalized tax rate as Adjusted Income (Adjusted Income). We also disclose Adjusted Diluted EPS, calculated as Adjusted Income divided by diluted shares outstanding. 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.
Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS are not substitutes for the U.S. GAAP measures of net income and net income per diluted share or for any other U.S. GAAP measures of operating performance. It should be noted that other companies may present similarly titled measures differently, and therefore, as presented by us, these measures may not be comparable to similarly titled measures reported by other companies. Adjusted
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EBITDA, Adjusted Income, and Adjusted Diluted EPS have material limitations as performance measures because they exclude items that are actually incurred or experienced in connection with the operation of our business.
The following table reconciles Net income to Adjusted EBITDA (dollar amounts in millions):
Three Months Ended March 31,
2022 2021
Net income $ 483 $ 320
Add (deduct):
Net loss attributed to noncontrolling interest 1 1
Income attributed to LP 484 320
Provision for income taxes 139 96
Depreciation and amortization 32 29
Stock-based compensation expense 7 1
Other operating credits and charges, net (38) —
Loss on early debt extinguishment — 11
Interest expense 3 5
Investment income (1) —
Other non-operating items 10 (1)
Adjusted EBITDA $ 636 $ 461
Siding $ 83 $ 90
OSB 505 354
EWP 38 7
South America 25 21
Other (6) (5)
Corporate (9) (6)
Adjusted EBITDA $ 636 $ 461
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The following table provides the reconciliation of Net income to Adjusted Income (dollar amounts in millions, except per share amounts):
Three Months Ended March 31,
2022 2021
Net income $ 483 $ 320
Add (deduct):
Net loss attributed to noncontrolling interest 1 1
Income attributed to LP 484 320
Other operating credits and charges, net (38) —
Loss on early debt extinguishment — 11
Reported tax provision 139 96
Adjusted income before tax 585 427
Normalized tax provision at 25% (146) (107)
Adjusted Income $ 439 $ 320
Diluted shares outstanding 86 107
Diluted net income per share attributed to LP $ 5.60 $ 3.00
Adjusted Diluted EPS $ 5.08 $ 3.01
Key Performance Indicators
In addition, management monitors certain key performance indicators to evaluate our business performance, which include our Overall Equipment Effectiveness (OEE) and our sales volume relative to housing starts, as provided by reports from the U.S. Department of Census.
The following tables set forth: (1) housing starts, (2) our North American sales volume, and (3) OEE. We consider the following items to be key performance indicators because LP’s management uses these metrics to evaluate our business and trends, measure our performance, and make strategic decisions, and believes that the key performance indicators presented provide additional perspective and insights when analyzing the core operating performance of LP. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures presented herein. These measures may not be comparable to similarly-titled performance indicators used by other companies.
We monitor housing starts, which is a leading external indicator of residential construction in the United States that correlates with the demand for many of our products. We believe that this is a useful measure for evaluating our results and that providing this measure should allow interested persons to more readily compare our sales volume for past and future periods to an external indicator of product demand. 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 indicators reported by other companies.
Three Months Ended March 31,
2022 2021
Housing starts 1 :
Single-Family 265 256
Multi-Family 130 106
395 362
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1 Actual U.S. Housing starts data reported by U.S. Census Bureau as published through April 19, 2022.
We monitor sales volumes for our products in our Siding, OSB and EWP segments, which we define as the number of units of our products sold within the applicable period. Evaluating sales volume by product type helps us identify and address changes in product demand, broad market factors that may affect our performance, and opportunities for future growth. It should be noted that other companies may present sales volumes differently and, therefore, as presented by us, sales volumes may not be comparable to similarly-titled measures reported by other companies. 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 months ended March 31, 2022 and 2021:
Three Months Ended March 31, 2022 Three Months Ended March 31, 2021
Sales Volume Siding OSB EWP South America Total Siding OSB EWP South America Total
Siding Solutions (MMSF) 421 — — 8 429 406 — — 14 420
OSB - commodity (MMSF) — 437 — 437 — 456 — 456
OSB - Structural Solutions (MMSF) — 525 — 150 675 — 402 — 147 549
I-Joist (MMLF) — — 30 30 — — 30 30
LVL (MCF) — — 1,807 1,807 — — 1,911 1,911
LSL (MCF) — — — — — — 441 441
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. It should be noted that other companies may present OEE differently and, therefore, as presented by us, OEE may not be comparable to similarly-titled measures reported by other companies. We believe that when used in conjunction with other metrics, OEE can be a useful measure for evaluating our ability to generate profits, and that providing this measure should allow interested persons to more readily monitor operational improvements. During the quarter ended March 31, 2022, we modified our OEE measure to use a best in LP class target across all sites. This modification will allow us to optimize capital investments, focus maintenance and reliability improvements, and improve overall equipment efficiency. All previously-reported periods have been adjusted accordingly. OEE for the three months ended March 31, 2022 and 2021, for each of our segments is listed below:
Three Months Ended March 31,
2022 2021
Siding 76 % 74 %
OSB 73 % 73 %
EWP 87 % 91 %
South America 74 % 70 %
Results of Operations
Our results of operations are separately discussed below for each of our segments, as well as for the “Other” category, which comprises other products that are not individually significant. See Note 18 of the Notes to the Condensed Consolidated Financial Statements included in Item 1 of this quarterly report on Form 10-Q for further information regarding our segments.
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Siding
The Siding segment serves diverse end markets with a broad product offering of engineered wood siding, trim, and fascia, including LP ® SmartSide ® Trim & Siding, LP ® SmartSide ® ExpertFinish ® Trim & Siding, LP BuilderSeries ® Lap Siding, and LP ® Outdoor Building Solutions ® (collectively referred to as Siding Solutions).
Segment sales, Adjusted EBITDA, and Adjusted EBITDA margin for this segment were as follows (dollar amounts in millions):
Three Months Ended March 31,
2022 2021 Change
Net sales $ 332 $ 285 16 %
Adjusted EBITDA 83 90 (8) %
Adjusted EBITDA margin 25 % 32 %
Sales in this segment by product line were as follows (dollar amounts in millions):
Three Months Ended March 31,
2022 2021 Change
Siding Solutions $ 330 $ 282 17 %
Other 2 3 (35) %
Total $ 332 $ 285 16 %
Percent changes in average sales prices and unit shipments for the three months ended March 31, 2022, compared to the corresponding period in 2021, were as follows:
Three Months Ended March 31,
2022 versus 2021
Average Net
Selling Price Unit
Shipments
Siding Solutions 12 % 4 %
Siding Solutions price increases and higher sales of innovative products drove increases in both average net selling price and sales volume, resulting in 17% growth in Siding Solutions net sales. The decrease in Adjusted EBITDA of $7 million reflects price and volume growth offset by $26 million of raw material and freight cost inflation and $12 million of discretionary investments in support of future growth, including Houlton start up and sales and marketing costs.
OSB
The OSB segment manufactures and distributes OSB structural panel products, including our value-added OSB portfolio known as LP Structural Solutions (which includes LP ® TechShield ® Radiant Barrier, LP WeatherLogic ® Air & Water Barrier, LP Legacy ® Premium Sub-Flooring, and LP ® FlameBlock ® Fire-Rated Sheathing) and LP ® TopNotch ® Sub-Flooring. OSB is manufactured using wood strands arranged in layers and bonded with resins.
Segment sales, Adjusted EBITDA, and Adjusted EBITDA Margin for this segment were as follows (dollar amounts in millions):
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Three Months Ended March 31,
2022 2021 Change
Net sales $ 744 $ 539 38 %
Adjusted EBITDA 505 354 43 %
Adjusted EBITDA margin 68 % 66 %
Sales in this segment by product line were as follows (dollar amounts in millions):
Three Months Ended March 31,
2022 2021 Change
OSB - Structural Solutions $ 406 $ 254 60 %
OSB - commodity 334 282 18 %
Other 4 3 24 %
Total $ 744 $ 539 38 %
Percent changes in average sales prices and unit shipments for the three months ended March 31, 2022, compared to the corresponding period in 2021, were as follows:
Three Months Ended March 31,
2022 versus 2021
Average Net
Selling Price Unit
Shipments
OSB - Structural Solutions 22 % 31 %
OSB - Commodity 24 % (4) %
OSB average net selling prices increased year-over-year by 23% and OSB sales volume increased year-over-year by 12%, resulting in 38% net sales growth. The increase in Adjusted EBITDA of $151 million reflects $130 million from higher prices and $42 million from higher sales volumes (primarily Structural Solutions), and $20 million of increased raw material costs.
EWP
The EWP segment is comprised of LP ® SolidStart ® I-Joist (I-Joist), Laminated Veneer Lumber (LVL) and other related products. This segment also includes the sales of plywood produced as an ancillary product of the LVL production process and I-Joist products produced by the joint ventures, in which LP sold its equity stake during the three months ended March 31, 2022.
During 2021, LP ceased production of Laminated Strand Lumber (LSL) at the Houlton, Maine facility to begin the conversion of that facility to Siding Solutions production.
Segment sales, Adjusted EBITDA, and Adjusted EBITDA margin for this segment were as follows (dollar amounts in millions):
Three Months Ended March 31,
2022 2021 Change
Net sales $ 170 $ 123 38 %
Adjusted EBITDA 38 7 408 %
Adjusted EBITDA margin 22 % 6 %
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Sales in this segment by product line were as follows (dollar amounts in millions):
Three Months Ended March 31,
2022 2021 Change
I-Joist $ 79 $ 48 64 %
LVL 65 43 50 %
LSL — 8 (100) %
Other, including plywood and related products 25 23 9 %
Total $ 170 $ 123 38 %
Percent changes in average sales prices and unit shipments for the three months ended March 31, 2022, compared to the corresponding period in 2021, were as follows:
Three Months Ended March 31,
2022 versus 2021
Average Net
Selling Price Unit
Shipments
I-Joist 63 % — %
LVL 59 % (5) %
Net sales for EWP increased year-over-year primarily due to price increases in response to significantly higher input costs, partially offset by the discontinuation of LSL production. Resulting increases in Adjusted EBITDA reflect the net effect of these price and cost increases.
South America
Our South America segment manufactures and distributes OSB structural panel and siding products in South America and certain export markets. This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, Columbia, Argentina, and Paraguay.
Segment sales, Adjusted EBITDA, and Adjusted EBITDA margin for this segment were as follows (dollar amounts in millions):
Three Months Ended March 31,
2022 2021 Change
Net sales $ 67 $ 53 26 %
Adjusted EBITDA 25 21 23 %
Adjusted EBITDA margin 38 % 39 %
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Sales in this segment by product line were as follows (dollar amounts in millions):
Three Months Ended March 31,
2022 2021 Change
OSB - Structural Solutions $ 58 $ 41 43 %
Siding 6 9 (35) %
Other 2 3 (19) %
Total $ 67 $ 53 26 %
Percent changes in average sales prices and unit shipments for the three months ended March 31, 2022, compared to the corresponding period in 2021, were as follows:
Three Months Ended March 31,
2022 versus 2021
Average Net
Selling Price Unit
Shipments
OSB - Structural Solutions 40 % 2 %
Siding 10 % (42) %
Net sales in South America increased year-over-year predominantly due to higher OSB and siding prices. Increased Adjusted EBITDA reflects the effect of these price increases, partially offset by higher costs of raw materials.
Other Products
Our Other products segment includes off-site framing operation Entekra Holdings, LLC, ("Entekra") remaining timber and timberlands, and other minor products, services, and closed operations, which do not qualify as discontinued operations. Other net sales were $26 million for the three months ended March 31, 2022, as compared to $18 million for the corresponding period in 2021. These increases are primarily due to increases in Entekra sales volumes.
Adjusted EBITDA was $(6) million for the three months ended March 31, 2022, as compared to $(5) million for the corresponding period in 2021.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $65 million for the three months ended March 31, 2022, compared to $48 million for the corresponding period in 2021. The increase in 2022 is due to increased travel, sales and marketing, and corporate overhead primarily driven by the reduction of restrictions related to the COVID-19 pandemic, and costs associated with stock compensation and performance incentives.
Income Taxes
We recognized an estimated tax provision of $139 million for the three months ended March 31, 2022, compared to $96 million for the corresponding period of 2021. 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 2022 and 2021, the primary differences between the U.S. statutory rate of 21% and the effective rate relate to state income tax.
Legal and Environmental Matters
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For a discussion of legal and environmental matters involving us and the potential impact thereof on our financial position, results of operations and cash flows, see Items 3, 7 and 8 in our 2021 Annual Report on Form 10-K and Note 12 of the Notes to the Condensed Consolidated Financial Statements included in Item 1 of this quarterly report on Form 10-Q.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity are existing cash and investment balances, cash generated by our operations, and our ability to borrow under such credit facilities as we may have in effect from time to time. We may also, from time to time, issue and sell equity, debt or hybrid securities, or engage in other capital market transactions.
Our principal uses of liquidity are paying the costs and expenses associated with our operations, servicing outstanding indebtedness, paying dividends, and making capital expenditures. We may also, from time to time, prepay or repurchase outstanding indebtedness or shares or acquire assets or businesses that are complementary to our operations. Any such repurchases may be commenced, suspended, discontinued or resumed, and the method or methods of effecting any such repurchases may be changed at any time, or from time to time, without prior notice.
Operating Activities
During the three months ended March 31, 2022 and 2021, cash provided by operations was $425 million and $314 million, respectively. The improvement in cash provided by operations for the period ended March 31, 2022, was primarily related to increases in OSB commodity pricing and revenue growth in Siding Solutions.
Investing Activities
During the three months ended March 31, 2022 and 2021, cash used in investing activities was $33 million and $32 million, respectively. During the three months ended March 31, 2022, we received $59 million in proceeds from the sale of our 50% equity interest in two joint ventures.
Capital expenditures for the three months ended March 31, 2022 and 2021, were $92 million and $34 million, respectively, primarily related to siding conversion expenditures and growth and maintenance capital. We expect to fund our capital expenditures through cash on hand and cash generated from operations.
Financing Activities
During the three months ended March 31, 2022, cash used in financing activities was $137 million. On November 2, 2021, LP's Board of Directors authorized a share repurchase plan under which LP was authorized to repurchase shares of LP's common stock totaling up to $500 million (the Second 2021 Share Repurchase Program). During the three months ended March 31, 2022, we used $104 million to repurchase shares of LP common stock under the Second 2021 Share Repurchase Program, and we paid cash dividends of $19 million. Additionally, we used $15 million to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.
During the three months ended March 31, 2021, cash used in financing activities was $158 million. During the three months ended March 31, 2021, we used $122 million to repurchase shares of LP common stock under the 2020 Share Repurchase Program, and we paid cash dividends of $17 million. Additionally, in March 2021, we issued $350 million aggregate principal amount of the 2029 Senior Notes and, in February 2021, LP delivered to holders of the 2024 Senior Notes a conditional notice of redemption to redeem on March 27, 2021 all of the 2024 Senior Notes outstanding at a redemption price of 102.438% of the principal amount thereof plus accrued and unpaid interest up to, but not including, the redemption date. The redemption notice became irrevocable on March 11, 2021, and the 2024 Senior Notes were fully redeemed on March 27, 2021. In connection with these aforementioned financing
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activities, we paid $13 million in redemption premiums and debt issuance costs. The remaining financing activities relate to the repurchase of stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.
Credit Facility and Letter of Credit Facility
In June 2021 and August 2021, we entered into the third and fourth amendments to our revolving credit facility, dated as of June 27, 2019 (Credit Facility), with American AgCredit, PCA, as administrative agent, and CoBank, ACB, as letter of credit issuer (as amended, the Amended Credit Facility). The Amended Credit Facility provides for a revolving credit facility in the principal amount of up to $550 million, with a $60 million sub-limit for letters of credit. The Amended Credit Facility, and all loans thereunder, become due on June 8, 2027. As of March 31, 2022, we had no amounts outstanding under the Amended Credit Facility.
The Amended Credit Facility contains various restrictive covenants and customary events of default, the occurrence of which could result in the acceleration of our obligation to repay the indebtedness outstanding thereunder. The Amended Credit Facility also contains financial covenants that require us and our consolidated subsidiaries to have, as of the end of each quarter, a capitalization ratio ( i.e. , funded debt less unrestricted cash to total capitalization) of no more than 57.5%. As of March 31, 2022, we were in compliance with all financial covenants under the Amended Credit Facility.
In March 2020, LP entered into the Letter of Credit Facility, which provides for the funding of letters of credit up to an aggregate outstanding amount of $20 million, which may be secured by certain cash collateral of LP. The Letter of Credit Facility includes an unused commitment fee, due quarterly, ranging from 0.50% to 1.875% of the daily available amount to be drawn on each letter of credit issued under the Letter of Credit Facility. The Letter of Credit Facility is subject to similar affirmative, negative, and financial covenants as those set forth in the Amended Credit Facility, including the capitalization ratio covenant. As of March 31, 2022, we were in compliance with all financial covenants under the Letter of Credit Facility.
Other Liquidity Matters
Off-Balance Sheet Arrangements
As of March 31, 2022, we had standby letters of credit of $13 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
We review our mill and investment assets for potential impairments at least annually and believe we have adequate support for the carrying value of our assets as of March 31, 2022.
If demand and pricing for our products are significantly below cycle average demand and pricing, should we decide to invest capital in alternative projects, should changes occur related to our wood supply for these locations, or should demand and pricing of our products fall as a result of the long-term effects of the COVID-19 pandemic, it is possible that future impairment charges will be required. As of March 31, 2022, there were no indications of impairment.
We also review, from time, to time possible dispositions of various assets, considering current and anticipated economic and industry conditions, our strategic plan, and other relevant factors. Because a determination to dispose of particular assets can require management to make assumptions regarding the transaction structure of the disposition and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.
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