What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-01 compared with 2023-08-02 · 97 added, 87 removed, 213 unchanged (46% of the section changed)

2 unchanged sentences

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."

We encourage you to review the risks and uncertainties described in the sections titled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" included in our 2022 Annual Report on Form 10-K and in this quarterly report on Form 10-Q.

Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other period.

We are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide.

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See "Note 7 –Discontinued Operations" for additional information.

In May 2023, we acquired a manufacturing facility in Wawa, Ontario from Wawa OSB, Inc.

In May 2023, we acquired a manufacturing facility in Wawa, Ontario, Canada from Wawa OSB, Inc.

a subsidiary of Forex Inc., for $80 million, financed by a combination of cash on hand and availability under the Amended Credit Facility .

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We are evaluating project schedules and market demand to determine when construction will begin.

The facility will remain shut down until such time construction is completed.

The facility will remain shut down until such construction is completed.

Demand for 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.

Census Bureau reported on July 19, 2023, that actual single-family housing starts were 14% lower for the three months ended June 30, 2023, and 21% lower for the six months ended June 30, 2023, as compared to the same periods in 2022.

Actual multi-family housing starts for the three and six months ended June 30, 2023 were about 6% lower and 2% lower, respectively, as compared to the same period in 2022.

Repair and remodeling activity is difficult to reasonably measure, but many indications, suggest that repair and remodeling activity is continuing to show resiliency.

Census Bureau reported on October 18, 2023, that actual single-family housing starts were 7% higher for the three months ended September 30, 2023, and 13% lower for the nine months ended September 30, 2023, as compared to the same periods in 2022.

Actual multi-family housing starts for the three and nine months ended September 30, 2023 were about 28% lower and 11% lower, respectively, as compared to the same period in 2022.

Repair and remodeling activity is difficult to reasonably measure, but many indications, suggest that repair and remodeling activity is moderating and may begin to exhibit year-over-year declines.

Future economic conditions in the United States and the demand for homes are uncertain due to inflationary impacts on the economy, including interest rates, employment levels, consumer confidence, and financial markets, among other things.

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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.

Supply and Demand for Siding

Siding Solutions is a specialty building material and is subject to competition from various siding technologies, including vinyl, stucco, wood, fiber cement, brick, and others.

Siding is a specialty building material and is subject to competition from various siding technologies, including vinyl, stucco, wood, fiber cement, brick, and others.

We believe we are the largest manufacturer in the engineered wood siding market.

We have consistently grown our Siding Solutions above the underlying market growth rates.

Siding Solutions is generally less sensitive to new housing market cyclicality since demand comes from other markets, including sheds and repair and remodel.

Our growth in this market depends upon the continued displacement of vinyl, wood, fiber cement, stucco, bricks, and other alternatives, our product innovation and our technological expertise in wood and wood composites to address the needs of our customers.

We have consistently grown our Siding above the underlying market growth rates.

Siding is generally less sensitive to new housing market cyclicality since demand also comes from other markets, including sheds and repair and remodel.

Our growth in this market depends upon the continued displacement of vinyl, wood,

fiber cement, stucco, bricks, and other alternatives, our product innovation and our technological expertise in wood and wood composites to address the needs of our customers.

Supply and Demand for OSB

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

During the three and six months ended June 30, 2023, OSB commodity prices have fallen with the decline in market demand for OSB commodity product.

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 2022 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

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Non-GAAP financial measures do not have standardized definitions and are not defined by U.S.

In this quarterly report on Form 10-Q, we disclose income (loss) attributed to LP from continuing operations before interest expense, provision for income taxes, depreciation and amortization, and excluding stock-based compensation expense, loss on impairment attributed to LP, business exit charges, 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 from continuing operations (Adjusted EBITDA), which is a non-GAAP financial measure.

In this quarterly report on Form 10-Q, we disclose Income attributed to LP from continuing operations before interest expense, provision for income taxes, depreciation and amortization, and excluding stock-based compensation expense, loss on impairment attributed to LP, business exit charges, 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 from continuing operations (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 (loss) attributed to LP from continuing operations, excluding loss on impairment attributed to LP, business exit 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, and pension settlement charges, and adjusting for a normalized tax rate as Adjusted Income (Adjusted Income).

We also disclose Income attributed to LP from continuing operations, excluding loss on impairment attributed to LP, business exit 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, and pension settlement charges, and adjusting for a normalized tax rate as Adjusted Income (Adjusted Income).

We also disclose Adjusted Diluted EPS, which is 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.

Reconciliations of Adjusted EBITDA, Adjusted Income and Adjusted Diluted EPS to their most directly comparable U.S.

GAAP financial measure, Net income, are presented below.

Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS are not substitutes for the U.S.

GAAP measures of Net income (loss), Income (loss) attributed to LP from continuing operations, and Income (loss) attributed to LP from continuing operations per diluted share or for any other U.S.

GAAP measures of Net income, Income attributed to LP from continuing operations, and Income attributed to LP from continuing operations per diluted share or for any other U.S.

GAAP measures of operating performance.

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Adjusted 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.

During the three months ended June 30, 2023, we updated our definition of Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS to exclude other business exit charges not classified as discontinued operations.

Business exit charges consist of inventory and other asset impairment and exit charges related to the exit of other businesses

not individually significant.

We consider business exit charges to be outside the performance of our ongoing core business operations and believe that presenting Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS excluding business exit charges provides increased transparency as to the operating costs of our current business performance.

During the nine months ended September 30, 2023, we updated our definitions of Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS to exclude other business exit charges not classified as discontinued operations.

Business exit charges consist of inventory and other asset impairment and exit charges related to the exit of other businesses not individually significant.

We consider business exit charges to be outside the performance of our

ongoing core business operations and believe that presenting Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS excluding business exit charges provides increased transparency as to the operating costs of our current business performance.

We did not revise prior years’ Adjusted EBITDA, Adjusted Income, and Adjusted Diluted EPS amounts because there were no significant costs similar in nature to these items.

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,

2023 2022 2023 2022

Net income (loss) $ (21) $ 385 $ 1 $ 868

Net income $ 118 $ 226 $ 119 $ 1,093

Add (deduct):

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Income from discontinued operations, net of income taxes — (97) — (196)

Income (loss) attributed to LP from continuing operations (20) 348 1 770

Income attributed to LP from continuing operations 118 129 119 898

Provision for income taxes 44 44 66 284

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Stock-based compensation expense 2 2 9 15

Loss on impairment attributed to LP 1 — 1 —

Other operating credits and charges, net (7) (7) 16 (17)

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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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

Net income (loss) attributed to LP from continuing operations per share - diluted $ (0.28) $ 4.28 $ 0.02 $ 9.19

Net income (loss) $ (21) $ 385 $ 1 $ 868

Net income attributed to LP from continuing operations per share - diluted $ 1.63 $ 1.74 $ 1.65 $ 11.16

Net income $ 118 $ 226 $ 119 $ 1,093

Add (deduct):

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Income from discontinued operations, net of income taxes — (97) — (196)

Income (loss) attributed to LP from continuing operations (20) 348 1 770

Income attributed to LP from continuing operations 118 129 119 898

Loss on impairment attributed to LP 1 — 1 —

Other operating credits and charges, net (7) (7) 16 (17)

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

(thousands of units) Three Months Ended June 30, Six Months Ended June 30,

(thousands of units) Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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housing starts data reported by U.S.

Census Bureau as published through July 19, 2023.

Census Bureau as published through October 18, 2023.

We monitor sales volumes for our products in our Siding, OSB, and South America segments, which we define as the number of units of our products sold within the applicable period.

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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, 2023 and 2022:

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

The following table sets forth sales volumes for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

Sales Volume Siding OSB South America Total Siding OSB South America Total

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OSB - commodity (MMSF) — 401 — 401 — 544 — 544

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Sales Volume Siding OSB South America Total Siding OSB South America Total

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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.

OEE for the three and six months ended June 30, 2023 and 2022, 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, 2023 and 2022, for each of our segments is listed below:

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

2023 2022 2023 2022

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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,

2023 2022 % Change 2023 2022 % Change

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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,

2023 2022 % Change 2023 2022 % Change

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Total $ 345 $ 394 (13) % $ 996 $ 1,083 (8) %

Percent changes in average Net sales prices and unit shipments for the three and six months ended June 30, 2023, compared to the corresponding periods in 2022, were as follows:

Percent changes in average Net sales prices and unit shipments for the three and nine months ended September 30, 2023, compared to the corresponding periods in 2022, were as follows:

Three Months Ended

June 30, 2023 versus 2022 Six Months Ended

June 30, 2023 versus 2022

September 30, 2023 versus 2022 Nine Months Ended

September 30, 2023 versus 2022

Selling Price Unit

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Siding Solutions 3 % (16) % 6 % (14) %

The effects of list price increases drove year-over-year increases in the average net selling price for the three and six months ended June 30, 2023.

The volume decreases for the three and six months ended June 30, 2023 were driven by challenging new and existing home selling markets and elevated levels of channel inventory compared to the prior periods.

Adjusted EBITDA decreased year-over-year by $19 million in the second quarter of 2023, reflecting the net impact of lower volumes, $6 million of raw material inflation, and $6 million of discretionary investments in support of future growth, including siding mill conversions and sales and marketing costs, partially offset by higher average selling prices.

The year-over-year decrease in Adjusted EBITDA of $34 million for the six months ended June 30, 2023, reflects the net impact of lower volumes, $20 million of raw material inflation, and $9 million of discretionary investments in support of future growth, including siding mill conversions and sales and marketing costs, partially offset by higher average selling prices.

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, LP NovaCore ® Thermal Insulated Sheathing, LP ® FlameBlock ® Fire-Rated Sheathing, and LP ® TopNotch ® Sub-Flooring).

The effects of list price increases drove year-over-year increases in the average net selling price for the three and nine months ended September 30, 2023.

The volume decreases for the three and nine months ended September 30, 2023 were driven by record results in the comparable periods and challenging new and existing home selling markets in the current periods.

Adjusted EBITDA decreased year-over-year by $19 million in the third quarter of 2023, reflecting the net impact of lower volumes and $5 million of press rebuild costs, partially offset by higher average selling prices and $9 million in lower inflationary costs including freight, raw materials, and labor.

Adjusted EBITDA decreased year-over-year by $53 million for the nine months ended September 30, 2023, which reflects the net impact of lower volumes, $8 million in discretionary investments to support future growth (including siding mill conversions and sales and marketing costs), and $5 million in press rebuild costs, partially offset by higher average selling prices and $13 million in lower inflationary costs (including freight, raw materials, and labor).

OSB is manufactured using wood strands arranged in layers and bonded with resins.

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,

2023 2022 % Change 2023 2022 % Change

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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,

2023 2022 % Change 2023 2022 % Change

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Total $ 335 $ 388 (14) % $ 754 $ 1,805 (58) %

Percent changes in average Net sales prices and unit shipments for the three and six months ended June 30, 2023, compared to the corresponding periods in 2022, were as follows:

Percent changes in average Net sales prices and unit shipments for the three and nine months ended September 30, 2023, compared to the corresponding periods in 2022, were as follows:

Three Months Ended

June 30, 2023 versus 2022

Six Months Ended

June 30, 2023 versus 2022

September 30, 2023 versus 2022

Nine Months Ended

September 30, 2023 versus 2022

Selling Price Unit

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OSB - commodity 18 % (26) % (47) % (21) %

The year-over-year net sales decrease of $444 million for the three months ended June 30, 2023 reflects a $368 million decrease in OSB prices, a $33 million decrease in sales volume from production curtailments, and a $28 million decrease related to production volume from the conversion of our Sagola, Michigan mill to siding production.

The year-over-year net sales decrease of $998 million for the six months ended June 30, 2023 reflects an $838 million decrease in OSB prices, an $84 million decrease in sales volume from production curtailments, and a $55 million decrease related in production volume from the conversion of the Sagola mill to siding production.

The year-over-year decreases in Adjusted EBITDA of $366 million and $866 million for the three and six months ended June 30, 2023, respectively, reflects lower OSB prices and sales volumes (as described above), partially offset by lower mill-related costs.

The year-over-year Net sales decrease of $53 million for the three months ended September 30, 2023 reflects a $28 million increase in OSB prices, a $33 million decrease in sales volumes primarily from market curtailments, and $43 million less production volume due to the conversion of our Sagola, Michigan mill to siding production.

The year-over-year Net sales decrease of $1,051 million for the nine months ended September 30, 2023 reflects an $813 million decrease in OSB prices, a $115 million decrease in sales volumes primarily from market curtailments, and a $98 million decrease related to production volumes from the conversion of the Sagola mill to siding production.

Adjusted EBITDA increased year-over-year by $7 million in the third quarter of 2023, reflecting the net impact of higher OSB commodity prices and lower mill-related costs, partially offset by lower sales volumes.

Adjusted EBITDA decreased year-over-year by $860 million for the nine months ended September 30, 2023, which reflects the net impact of lower OSB commodity prices and sales volumes, partially offset by lower mill-related costs.

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, Colombia, Argentina, Paraguay, and Mexico.

This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru.

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,

2023 2022 % Change 2023 2022 % Change

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Net sales in this segment by product 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,

2023 2022 % Change 2023 2022 % Change

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Total $ 45 $ 53 (16) % $ 153 $ 190 (20) %

Percent changes in average Net sales price and unit shipments for the three and six months ended June 30, 2023, compared to the corresponding periods in 2022, were as follows:

Percent changes in average Net sales price and unit shipments for the three and nine months ended September 30, 2023, compared to the corresponding periods in 2022, were as follows:

Three Months Ended

June 30, 2023 versus 2022 Six Months Ended

June 30, 2023 versus 2022

September 30, 2023 versus 2022 Nine Months Ended

September 30, 2023 versus 2022

Selling Price Unit

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Siding 18 % (32) % 5 % — %

South America net sales decreased year-over-year by $18 million and $29 million for the three and six months ended June 30, 2023, respectively, predominantly driven by lower OSB sales volumes and average selling prices.

The year-over-year decrease in Adjusted EBITDA of $14 million and $27 million for the three and six months ended June 30, 2023, respectively, reflects the lower sales volumes and average selling prices (described above) as well as higher raw material costs.

South America Net sales decreased year-over-year by $8 million and $38 million for the three and nine months ended September 30, 2023, respectively, predominantly driven by lower OSB sales volumes and average selling prices.

The year-over-year decreases in Adjusted EBITDA of $7 million and $34 million for the three and nine months ended September 30, 2023, respectively, reflect the lower sales volumes and average selling prices (described above) and equipment relocation cost of $3 million.

Our other products segment includes the 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.

During the second quarter of 2023, we announced the shutdown of Entekra and recognized business exit charges charges of $34 million, which consisted of severance costs, inventory obsolescence, impairment of property, plant, and equipment, impairment of right-of-use lease assets, and impairment definite-lived intangible assets.

Other Net sales were $9 million and $17 million for the three and six months ended June 30, 2023, respectively, as compared to $30 million and $55 million for the corresponding periods in 2022.

The year-over-year decrease in Net sales for the three and six months ended June 30, 2023 is primarily due to lower Entekra sales volumes.

Adjusted EBITDA was $(6) million and $(14) million for the three and six months ended June 30, 2023, respectively, as compared to $(7) million and $(13) million for the corresponding periods in 2022.

During the second quarter of 2023, we announced the shutdown of Entekra and recognized business exit charges of $1 million and $35 million for the three and nine months ended September 30, 2023, respectively.

These charges consisted of severance costs, inventory obsolescence, impairment of property, plant, and equipment, impairment of right-of-use lease assets, and impairment definite-lived intangible assets.

Other Net sales were $4 million and $21 million for the three and nine months ended September 30, 2023, respectively, as compared to $17 million and $72 million for the corresponding periods in 2022.

The year-over-year decrease in other Net sales for the three and nine months ended September 30, 2023 is primarily due to lower Entekra sales volumes as a result of the aforementioned shutdown.

Adjusted EBITDA was $0 million and $(15) million for the three and nine months ended September 30, 2023, respectively, as compared to $(7) million and $(19) million for the corresponding periods in 2022, respectively.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $66 million and $133 million for the three and six months ended June 30, 2023, respectively, compared to $67 million and $129 million for the corresponding periods in 2022.

We recognized an estimated tax provision from continuing operations of $21 million and $22 million for the three and six months ended June 30, 2023, respectively, compared to $116 million and $240 million for the corresponding periods of 2022.

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.

Selling, general, and administrative expenses were $58 million and $191 million for the three and nine months ended September 30, 2023, respectively, compared to $67 million and $196 million for the corresponding periods in 2022.

The year-over-year decrease in Selling, general, and administrative expenses is driven by lower incentive based compensation.

We recognized an estimated tax provision from continuing operations of $44 million and $66 million for the three and nine months ended September 30, 2023, respectively, compared to $44 million and $284 million for the corresponding periods of 2022.

The total effective tax rate for continuing operations for the three and nine months ended September 30, 2023, was 27% and 36%, respectively, compared to 26% and 24%, respectively, for the comparable periods in 2022.

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 2023 the primary differences between the U.S.

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Operating Activities

During the six months ended June 30, 2023 and 2022, cash provided by operations was $(30) million and $908 million, respectively.

During the nine months ended September 30, 2023 and 2022, cash provided by operations was $157 million and $1,103 million, respectively.

The decrease in cash provided by operations was primarily related to lower income from operations, increases in working capital, and timing of cash paid for income taxes.

Investing Activities

During the six months ended June 30, 2023 and 2022, cash used in investing activities was $271 million and $135 million, respectively.

During the six months ended June 30, 2023, we paid $80 million to acquire the assets owned by Wawa OSB, Inc.

During the six months ended June 30, 2022 we received $59 million in proceeds from the sale of our 50% equity interest in two joint ventures.

Capital expenditures for the six months ended June 30, 2023 and 2022, were $188 million and $196 million, respectively, primarily related to siding conversion expenditures and growth and maintenance capital.

During the nine months ended September 30, 2023 and 2022, cash used in investing activities was $312 million and $14 million, respectively.

During the nine months ended September 30, 2023, we paid $80 million to acquire the assets owned by Wawa OSB, Inc.

During the nine months ended September 30, 2022, we received $265 million in proceeds from sales of assets, primarily associated with the sale of the EWP segment assets and the sale of our 50% equity interest in two joint ventures.

Capital expenditures for the nine months ended September 30, 2023 and 2022, were $236 million and $282 million, respectively, primarily related to siding conversion expenditures and growth and maintenance capital.

Financing Activities

During the six months ended June 30, 2023, cash used in financing activities was $14 million.

During the nine months ended September 30, 2023, cash used in financing activities was $61 million.

We paid cash dividends of $52 million and used $10 million to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

These payments were partially financed by net borrowings of $30 million under our Amended Credit Facility during the six months ended June 30, 2023.

During the six months ended June 30, 2022, cash used in financing activities was $626 million.

During the six months ended June 30, 2022, we used $575 million to repurchase shares of LP common stock ($500 million from the share repurchase program approved by the Board of Directors on November 2, 2021 and $75 million from the 2022 Share Repurchase Program (defined below)).

During the nine months ended September 30, 2023, we borrowed and subsequently repaid $80 million from our Amended Credit Facility.

During the nine months ended September 30, 2022, cash used in financing activities was $968 million.

During the nine months ended September 30, 2022, we used $900 million to repurchase shares of LP common stock ($500 million from the share repurchase program approved by the Board of Directors on November 2, 2021 and $400 million from the 2022 Share Repurchase Program (defined below)).

Additionally, we paid cash dividends of $53 million and used $15 million to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

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The Credit Agreement 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 Credit Agreement, and all loans thereunder, become due on November 29.

As of June 30, 2023, we had $30 million in outstanding borrowings under our Amended Credit Facility.

All loans under the Credit Agreement become due on November 29, 2028.

As of September 30, 2023, we had no outstanding borrowings under our Amended Credit Facility.

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

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, funded debt less unrestricted cash to total capitalization) of no more than 57.5%.

As of June 30, 2023, we were in compliance with all financial covenants under the Credit Agreement.

As of September 30, 2023, we were in compliance with all financial covenants under the Credit Agreement.

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.

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The Letter of Credit Facility is subject to similar affirmative, negative, and financial covenants as those set forth in the Credit Agreement, including the capitalization ratio covenant.

As of June 30, 2023, we were in compliance with all covenants under the Letter of Credit Facility.

As of September 30, 2023, we were in compliance with all covenants under the Letter of Credit Facility.

Other Liquidity Matters

Off-Balance Sheet Arrangements

As of June 30, 2023, we had standby letters of credit of $13.5 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, 2023, we had standby letters of credit of $13.7 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 the carrying values of our long-lived assets for potential impairments and believe we have adequate support for the carrying values of our long-lived assets as of June 30, 2023.

In April 2023, we announced the shutdown of Entekra resulting in pre-tax, non-cash impairment charges of $30 million for the three and six months ended June 30, 2023.

We review the carrying values of our long-lived assets for potential impairments and believe we have adequate support for the carrying values of our long-lived assets as of September 30, 2023.

In April 2023, we announced the shutdown of Entekra resulting in pre-tax, non-cash charges of $31 million for the nine months ended September 30, 2023.

See further discussion in “Note 8 - Business Exit Charges.”

If demand and pricing for our products fall to levels significantly below cycle average demand and pricing, should we decide to invest capital in alternative projects, or should changes occur related to our wood supply for our mills, it is possible that future impairment charges will be required.

As of June 30, 2023, there were no indications of impairment.

As of September 30, 2023, there were no indications of impairment.

We also review from time to time potential 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.

During the three months ended June 30, 2023, we recorded impairment charges of $12 million and $3 million related to property, plant, and equipment and operating lease assets related to Entekra which were written down to fair value based on Level 2 inputs under ASC 820 using quoted market prices.

net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.

During the nine months ended September 30, 2023, we recorded impairment charges of $13 million and $3 million related to property, plant, and equipment and operating lease assets, respectively, related to Entekra which were written down to fair value based on Level 2 inputs under ASC 820, using quoted market prices.

See further discussion in “Note 8 - Business Exit Charges.”

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What changed 10-Q

Item 2. Management’s Discussion and Analysis