What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-06 · 109 added, 86 removed, 177 unchanged (52% of the section changed)

9 unchanged sentences

To serve these markets, we operate in three segments:

Siding, OSB, and LPSA.

Siding, Oriented Strand Board (OSB), and LP South America (LPSA).

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 April 17, 2025, that actual single-family housing starts were 6% lower for the three months ended March 31, 2025, as compared to the same period in 2024.

Actual multi-family housing starts for the three months ended March 31, 2025, were 11% higher, as compared to the same period in 2024.

Repair and remodeling activity is difficult to reasonably measure, but many indicators suggest that it has increased slightly year-over-year.

Future economic conditions in the United States and the demand for homes are uncertain due to various macroeconomic factors, including interest rates, employment levels, changing trade policy in various jurisdictions (including the imposition of new tariffs and the modification of existing tariffs), consumer confidence, and financial markets, among other things.

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.

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.

Future economic conditions in the United States and the demand for homes are uncertain due to various macroeconomic factors, including interest rates, employment levels, changing trade policy in various jurisdictions (including the imposition of trade barriers, new tariffs and the modification of existing tariffs), consumer confidence, and financial markets, among other things.

Additionally, we have experienced increases in material prices, supply disruptions, and labor challenges, which we continue to address as we work to meet the demands of builders, remodelers, and homeowners worldwide.

The international trade landscape currently is extremely volatile.

The United States government has recently announced significant changes to U.S.

trade policy, including the implementation or planned implementation 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 United States and certain other countries.

These actions, and potential retaliatory tariffs imposed by other countries on U.S.

export products, could negatively affect our sales and our competitive position in markets outside the United States.

Further, changing trade policy in the United States 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.

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 United States or other countries.

In the three months ended March 31, 2025, our cost of sales in the Siding segment was impacted by $2 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 U.S.

as well as in other markets in which we operate, we estimate incremental costs of approximately $12 million in 2025, most of which will be incurred by the Siding segment.

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.

and certain other countries.

In response, certain countries have imposed, or are considering, retaliatory tariffs on U.S.

The global tariff landscape continues to shift rapidly, with changes impacting businesses and markets around the world.

These changes could negatively affect our sales and our competitive position within the U.S.

market and in markets outside the U.S.

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.

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.

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 $12 million in 2025, most of which would likely be incurred by the Siding segment.

The potential impact of these factors on our future operational and financial performance is uncertain.

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

Three Months Ended March 31,

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

2025 2024 2025 2024

Net income $ 54 $ 160 $ 145 $ 267

2 unchanged sentences

Stock-based compensation expense 7 4 12 11

Loss on impairment 17 — 17 —

Other operating credits and charges, net 2 1 4 1

Business exit credits — (1)

Business exit credits and charges — (14) — (15)

Interest expense 4 4 7 8

4 unchanged sentences

Siding $ 125 $ 105 $ 230 $ 195

OSB 19 125 73 215

LPSA 9 10 21 20

Other (10) (11) (20) (19)

1 unchanged sentence

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,

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

2025 2024 2025 2024

Net income per share of common stock - diluted $ 0.77 $ 2.23 $ 2.07 $ 3.71

Net income $ 54 $ 160 $ 145 $ 267

Loss on impairment 17 — 17 —

Other operating credits and charges, net 2 1 4 1

Business exit credits — (1)

Business exit credits and charges — (14) — (15)

Reported tax provision 19 53 45 94

16 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 months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

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,

2025 2024 2025 2024

Housing starts 1 :

1 unchanged sentence

Multi-Family 109 89 198 169

366 370 684 692

1 Actual U.S.

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

Census Bureau as published through April 17, 2025.

Census Bureau as published through July 18, 2025.

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.

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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 months ended March 31, 2025 and 2024:

Three Months Ended March 31, 2025 Three Months Ended March 31, 2024

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

Sales Volume Siding OSB LPSA Total Siding OSB LPSA Total

Siding Solutions (MMSF) 434 — 11 445 399 — 12 411

OSB - Structural Solutions (MMSF) — 398 151 549 — 443 130 573

OSB - commodity (MMSF) — 426 — 426 — 415 — 415

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

Siding Solutions

498 — 7 505 459 — 6 465

OSB - Structural Solutions

— 450 128 578 — 452 136 588

OSB - commodity

— 430 — 430 — 415 — 415

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

Sales Volume Siding OSB LPSA Total Siding OSB LPSA Total

Siding Solutions

932 — 19 950 858 — 18 876

OSB - Structural Solutions

— 848 279 1,127 — 895 266 1,161

OSB - commodity

— 856 — 856 — 830 — 830

We measure Overall Equipment Effectiveness (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 months ended March 31, 2025, and 2024, for each of our segments is listed below:

Three Months Ended March 31,

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,

2025 2024 2025 2024

Siding 78 % 77 % 78 % 78 %

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

Three Months Ended March 31,

2025 2024 % Change

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

2025 2024 % Change 2025 2024 % Change

Net sales $ 460 $ 415 11 % $ 862 $ 776 11 %

1 unchanged sentence

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

Three Months Ended March 31,

2025 2024 % Change

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

2025 2024 % Change 2025 2024 % Change

Siding Solutions $ 458 $ 413 11 % $ 857 $ 772 11 %

1 unchanged sentence

Total $ 460 $ 415 11 % $ 862 $ 776 11 %

Percent changes in average net sales prices and unit shipments for the three months ended March 31, 2025, compared to the corresponding period in 2024, were as follows:

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:

Three Months Ended

March 31, 2025 versus 2024

June 30, 2025 versus 2024 Six Months Ended

June 30, 2025 versus 2024

Selling Price Unit

Shipments Average Net

Selling Price Unit

Siding Solutions 2 % 8 % 2 % 9 %

Strong order files and price realization resulted in higher net sales versus prior year.

ExpertFinish products accounted for 10% of volume and 15% of net sales in the three months ended March 31, 2025, contributing to this favorable mix.

The increase in Adjusted EBITDA of $16 million reflects the impacts of the net sales increase offset by investments in sales and marketing and $2 million of tariff impact.

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, and LP ® TopNotch ® 350 Durable Sub-Flooring).

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.

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

Three Months Ended March 31,

2025 2024 % Change

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

2025 2024 % Change 2025 2024 % Change

Net sales $ 250 $ 351 (29) % $ 517 $ 664 (22) %

1 unchanged sentence

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

Three Months Ended March 31,

2025 2024 % Change

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

2025 2024 % Change 2025 2024 % Change

OSB - Structural Solutions $ 143 $ 197 (28) % $ 286 $ 371 (23) %

2 unchanged sentences

Total $ 250 $ 351 (29) % $ 517 $ 664 (22) %

Percent changes in average net sales prices and unit shipments for the three months ended March 31, 2025, compared to the corresponding period in 2024, were as follows:

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:

Three Months Ended

March 31, 2025 versus 2024

June 30, 2025 versus 2024

Six Months Ended

June 30, 2025 versus 2024

Selling Price Unit

Shipments Average Net

Selling Price Unit

OSB - Structural Solutions (27) % — % (19) % (5) %

OSB - commodity (33) % 4 % (23) % 3 %

First quarter 2025 net sales for the OSB segment decreased year-over-year by $46 million (or 15%), reflecting a $32 million decrease from lower OSB selling prices and a $13 million decrease in sales volumes.

Adjusted EBITDA for the three months ended March 31, 2025 decreased year-over-year by $36 million, primarily reflecting the impact of lower OSB prices and volumes.

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.

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 March 31,

2025 2024 % Change

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

2025 2024 % Change 2025 2024 % Change

Net sales $ 43 $ 46 (7) % $ 95 $ 93 2 %

Adjusted EBITDA 9 10 (13) % 21 20 4 %

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

Three Months Ended March 31,

2025 2024 % Change

OSB - Structural Solutions $ 44 $ 38 16 %

Siding 7 7 4 %

Other — 2 (73) %

Total $ 52 $ 47 11 %

Percent changes in average net sales price and unit shipments for the three months ended March 31, 2025, compared to the corresponding period in 2024, were as follows:

Three Months Ended

March 31, 2025 versus 2024

Selling Price Unit

OSB - Structural Solutions (1) % 17 %

Siding 6 % (2) %

The year-over-year net sales and Adjusted EBITDA increases for the three months ended March 31, 2025 reflect higher sales volumes offset by unfavorable currency fluctuations.

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.

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 for the three months ended March 31, 2025, as compared to $3 million for the corresponding period in 2024.

Adjusted EBITDA was $(10) million for the three months ended March 31, 2025, as compared to $(8) million for the corresponding period in 2024.

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.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $75 million for the three months ended March 31, 2025, compared to $69 million for the corresponding period in 2024.

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

We recognized an estimated tax provision of $26 million in the three months ended March 31, 2025, as compared to $41 million for the corresponding period in 2024.

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.

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 three months ended March 31, 2025, and 2024, the primary differences between the U.S.

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.

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Operating Activities

During the three months ended March 31, 2025 and 2024, cash provided by operations was $64 million and $105 million, respectively.

During the six months ended June 30, 2025 and 2024, cash provided by operations was $226 million and $317 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 three months ended March 31, 2025 and 2024, cash used in investing activities was $64 million and $41 million, respectively, relating to capital expenditures.

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.

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 three months ended March 31, 2025, cash used in financing activities was $87 million, which includes $61 million to repurchase shares of LP common stock under the 2024 Share Repurchase Program (defined below).

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.

Additionally, we paid cash dividends of $39 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 three months ended March 31, 2024, cash used in financing activities was $39 million, which includes $19 million of dividend payments and $6 million of stock repurchases from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

Additionally, during this period we used $13 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 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.

Additionally, during this period we had $37 million of dividend payments and $5 million of stock repurchases 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 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 amends the Credit Agreement.

The First Amendment 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 March 31, 2025, there were no outstanding borrowings pursuant to 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 June 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 March 31, 2025, we were in compliance with all financial covenants under the Amended Credit Agreement.

As of June 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 March 31, 2025, we were in compliance with all covenants under the Letter of Credit Facility.

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

Other Liquidity Matters

Off-Balance Sheet Arrangements

As of March 31, 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 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.

Potential Impairments

We review the carrying values of our long-lived assets for potential impairments and believe we have adequate support for the carrying value of each of these assets based upon the anticipated cash flows that result from our estimates of future demand, pricing, and production costs, assuming certain levels of planned capital expenditures.

However, 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.

No impairment was recognized during the three-months ended March 31, 2025.

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 such assets.

The carrying values of our long-lived assets are reviewed for potential impairments, and adequate support is believed by management to exist for each asset's carrying value based on anticipated cash flows derived from estimates of future demand, pricing, and production costs, assuming certain levels of planned capital expenditures.

However, if demand and pricing for our products decline significantly below cycle-average levels, if capital is allocated to alternative projects, or if changes occur in the wood supply for mills, future impairment charges may be required.

Potential asset dispositions are also periodically reviewed, taking into account current and anticipated economic and industry conditions, the strategic plan, and other relevant factors.

A decision to dispose of specific assets may require assumptions regarding the transaction structure of the disposition to estimate the net sales proceeds, which could be lower than prior estimates of undiscounted future net cash flows.

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.

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