LOUISIANA-PACIFIC CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Statements of Income Amounts in millions, except per share amounts (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net sales $ 755 $ 814 $ 1,478 $ 1,539 Cost of sales ( 577 ) ( 551 ) ( 1,103 ) ( 1,062 ) Gross profit 178 263 375 477 Selling, general, and administrative expenses ( 79 ) ( 71 ) ( 154 ) ( 140 ) Loss on impairment ( 17 ) — ( 17 ) — Other operating credits and charges, net ( 2 ) 2 ( 4 ) 3 Income from operations 80 194 200 339 Interest expense ( 4 ) ( 4 ) ( 7 ) ( 8 ) Investment income 4 6 8 11 Other non-operating income (expense) ( 7 ) 5 ( 12 ) 6 Income before income taxes 73 201 189 349 Provision for income taxes ( 19 ) ( 53 ) ( 45 ) ( 94 ) Equity in unconsolidated affiliate — 12 1 12 Net income $ 54 $ 160 $ 145 $ 267 Net income per share of common stock: Basic $ 0.77 $ 2.23 $ 2.08 $ 3.72 Diluted $ 0.77 $ 2.23 $ 2.07 $ 3.71 Average shares of common stock used to compute net income per share: Basic 70 72 70 72 Diluted 70 72 70 72 The accompanying Notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 4 Condensed Consolidated Statements of Comprehensive Income Amounts in millions (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income $ 54 $ 160 $ 145 $ 267 Other comprehensive income (loss), net of tax Foreign currency translation adjustments 6 ( 4 ) 18 ( 20 ) Comprehensive income $ 60 $ 156 $ 163 $ 248 The accompanying Notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 5 Condensed Consolidated Balance Sheets Amounts in millions, except per share amounts (Unaudited) June 30, 2025 December 31, 2024 ASSETS Cash and cash equivalents $ 333 $ 340 Receivables, net of allowance for doubtful accounts of $ 1 as of June 30, 2025 and December 31, 2024 168 131 Inventories 370 357 Prepaid expenses and other current assets 24 27 Total current assets 895 855 Property, plant, and equipment, net 1,639 1,592 Timber and timberlands 25 29 Operating lease assets, net 23 25 Goodwill and other intangible assets 25 26 Investments in and advances to affiliates 18 17 Other assets 23 20 Deferred tax asset 7 4 Total assets $ 2,656 $ 2,569 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued liabilities $ 290 $ 287 Income taxes payable 25 11 Total current liabilities 315 299 Long-term debt 348 348 Deferred income taxes 148 145 Non-current operating lease liabilities 22 24 Contingency reserves, excluding current portion 26 27 Other long-term liabilities 55 57 Total liabilities $ 914 $ 899 Stockholders’ equity: Common stock, $ 1 par value per share, 200 shares authorized; 85 shares issued and 70 shares issued and outstanding, respectively, as of June 30, 2025; and 86 shares issued and 70 shares issued and outstanding, respectively, as of December 31, 2024 85 86 Additional paid-in capital 488 478 Retained earnings 1,659 1,615 Treasury stock, 15 shares and 16 shares at cost as of June 30, 2025 and December 31, 2024, respectively ( 386 ) ( 386 ) Accumulated comprehensive loss ( 104 ) ( 122 ) Total stockholders’ equity 1,742 1,671 Total liabilities and stockholders’ equity $ 2,656 $ 2,569 The accompanying Notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 6 Condensed Consolidated Statements of Cash Flows Amounts in millions (Unaudited) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 145 $ 267 Adjustments to net income: Depreciation and amortization 70 62 Loss on impairment 17 — Stock-based compensation expense 12 11 Deferred taxes ( 4 ) 4 Foreign currency remeasurement and transaction loss (gain) 7 ( 5 ) Other adjustments, net 2 ( 16 ) Changes in assets and liabilities (net of acquisitions and divestitures): Receivables ( 37 ) ( 33 ) Inventories ( 18 ) 1 Prepaid expenses and other current assets 6 ( 11 ) Accounts payable and accrued liabilities 4 16 Income taxes payable, net of receivables 21 21 Net cash provided by operating activities 226 317 CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant, and equipment additions ( 132 ) ( 77 ) Other investing activities, net — 16 Net cash used in investing activities ( 132 ) ( 61 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payment of cash dividends ( 39 ) ( 37 ) Repurchase of common stock ( 61 ) ( 115 ) Other financing activities ( 4 ) ( 5 ) Net cash used in financing activities ( 105 ) ( 157 ) EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 3 ( 3 ) Net increase (decrease) in cash, cash equivalents, and restricted cash ( 7 ) 95 Cash, cash equivalents, and restricted cash at beginning of period 340 222 Cash, cash equivalents, and restricted cash at end of period $ 333 $ 317 Supplemental cash flow information: Cash paid for income taxes, net $ 28 $ 69 Cash paid for interest, net $ 7 $ 7 Unpaid capital expenditures $ 26 $ 10 The accompanying Notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 7 Condensed Consolidated Statements of Stockholders’ Equity Amounts in millions, except per share amounts (Unaudited) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Comprehensive (Loss) Income Total Stockholders’ Equity Shares Amount Shares Amount Balance, December 31, 2024 86 $ 86 16 $ ( 386 ) $ 478 $ 1,615 $ ( 122 ) $ 1,671 Net Income — — — — — 91 — 91 Dividends paid ($ 0.28 per share) — — — — — ( 20 ) — ( 20 ) Issuance of shares under stock plans — — — 3 ( 3 ) — — — Taxes paid related to net settlement of stock-based awards — — — ( 5 ) — — — ( 5 ) Purchase of stock ( 1 ) ( 1 ) — — — ( 61 ) — ( 62 ) Compensation expense associated with stock-based compensation — — — — 5 — — 5 Other comprehensive income — — — — — — 12 12 Balance, March 31, 2025 85 $ 85 15 $ ( 388 ) $ 480 $ 1,625 $ ( 110 ) $ 1,692 Net Income — — — — — 54 — 54 Dividends paid ($ 0.28 per share) — — — — — ( 19 ) — ( 19 ) Issuance of shares under stock plans — — — 2 1 — — 3 Taxes paid related to net settlement of stock-based awards — — — ( 1 ) — — — ( 1 ) Purchase of stock — — — — — — — — Compensation expense associated with stock-based compensation — — — — 7 — — 7 Other comprehensive income — — — — — — 6 6 Balance, June 30, 2025 85 $ 85 15 $ ( 386 ) $ 488 $ 1,659 $ ( 104 ) $ 1,742 8 Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Comprehensive (Loss) Income Total Stockholders’ Equity Shares Amount Shares Amount Balance, December 31, 2023 88 $ 88 16 $ ( 386 ) $ 465 $ 1,479 $ ( 89 ) $ 1,557 Net Income — — — — — 108 — 108 Dividends paid ($0.26 per share) — — — — — ( 19 ) — ( 19 ) Issuance of shares under stock plans — — — 6 ( 6 ) — — — Taxes paid related to net settlement of stock-based awards — — — ( 6 ) — — — ( 6 ) Purchase of stock — — — — — ( 13 ) — ( 13 ) Compensation expense associated with stock-based compensation — — — — 6 — — 6 Other comprehensive loss — — — — — — ( 15 ) ( 15 ) Balance, March 31, 2024 88 $ 88 16 $ ( 386 ) $ 465 $ 1,555 $ ( 104 ) $ 1,617 Net Income — — — — — 160 — 160 Dividends paid ($0.26 per share) — — — — — ( 19 ) — ( 19 ) Issuance of shares under stock plans — — — 1 1 — — 3 Taxes paid related to net settlement of stock-based awards — — — — — — — — Purchase of stock ( 1 ) ( 1 ) — — — ( 101 ) — ( 103 ) Compensation expense associated with stock-based compensation — — — — 4 — — 4 Other comprehensive loss — — — — — — ( 4 ) ( 4 ) Balance, June 30, 2024 87 $ 87 16 $ ( 385 ) $ 471 $ 1,595 $ ( 109 ) $ 1,658 The accompanying Notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 9 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION Nature of Operations Louisiana-Pacific Corporation and our subsidiaries are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide. Serving the new home construction, repair and remodeling, and outdoor structures markets, we have leveraged our expertise to become an industry leader known for innovation, quality, reliability, and sustainability. The principal customers for our building solutions are retailers, wholesalers, and home building and industrial businesses in North America and South America, and we make limited sales to customers in Asia, Australia, and Europe. The Company operates over 20 manufacturing facilities across the U.S., Canada, Chile, and Brazil, in certain cases through foreign subsidiaries . References to "LP," the "Company," "we," "our," and "us" refer to Louisiana-Pacific Corporation and its consolidated subsidiaries as a whole. See "Note 15. Selected Segment Data" below for further information regarding our products and segments. Basis of Presentation The unaudited Condensed Consolidated Financial Statements presented here have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial reporting. As such, they do not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements. Management believes that all necessary adjustments for a fair presentation have been included and are of a normal and recurring nature. These Condensed Consolidated Financial Statements and the accompanying Notes should be reviewed in conjunction with our annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025 (2024 Annual Report on Form 10-K). The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. The Condensed Consolidated Financial Statements include the accounts of LP and our controlled subsidiaries. All intercompany transactions, profits, and balances have been eliminated. NOTE 2. REVENUE We disaggregate revenue from contracts with customers into major product lines. We have determined that disaggregating revenue into these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in the segment reporting information in “Note 15. Selected Segment Data” below, our reportable segments are Siding, Oriented Strand Board (OSB), and LP South America (LPSA). The following tables present our reportable segment revenues, disaggregated by revenue source (dollar amounts in millions): Three Months Ended June 30, 2025 By product type and family: Siding OSB LPSA Other Total Value-add Siding Solutions $ 458 $ — $ 5 $ — $ 463 OSB - Structural Solutions — 143 37 — 180 458 143 42 — 643 Commodity OSB - commodity — 104 — — 104 Other Other products 2 3 1 2 8 $ 460 $ 250 $ 43 $ 2 $ 755 10 Three Months Ended June 30, 2024 By product type and family: Siding OSB LPSA Other Total Value-add Siding Solutions $ 413 $ — $ 4 $ — $ 417 OSB - Structural Solutions — 197 41 — 238 413 197 45 — 655 Commodity OSB - commodity — 149 — — 149 Other Other products 2 4 1 2 10 $ 415 $ 351 $ 46 $ 2 $ 814 Six Months Ended June 30, 2025 By product type and family: Siding OSB LPSA Other Total Value-add Siding Solutions $ 857 $ — $ 13 $ — $ 870 OSB - Structural Solutions — 286 81 — 367 857 286 94 — 1,237 Commodity OSB - commodity — 224 — — 224 Other Other products 5 7 1 4 17 $ 862 $ 517 $ 95 $ 4 $ 1,478 Six Months Ended June 30, 2024 By product type and family: Siding OSB LPSA Other Total Value-add Siding Solutions $ 772 $ — $ 11 $ — $ 783 OSB - Structural Solutions — 371 79 — 451 772 371 90 — 1,234 Commodity OSB - commodity — 283 — — 283 Other Other products 4 9 3 5 22 $ 776 $ 664 $ 93 $ 5 $ 1,539 Revenue is recognized when obligations under the terms of contracts (e.g. , purchase orders) with our customers are satisfied; generally, this occurs with the transfer of control of our products at a point in time. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The shipping cost incurred by us to deliver products to our customers is recorded in cost of sales. The expected costs associated with our warranties continue to be recognized as an expense when the products are sold. Our businesses routinely incur customer program costs to obtain favorable product placement, promote sales of products, and maintain competitive pricing. Customer program costs and incentives are accounted for as a reduction in net sales at the time the program is initiated and/or the revenue is recognized. The costs include, but are not 11 limited to, volume allowances and rebates, promotional allowances, and cooperative advertising programs. These costs are recorded at the later of (i) the time of sale or (ii) the implementation of the program based on management’s best estimates. Estimates are based on historical and projected experience for each type of program or customer. Volume allowances are accrued based on our estimates of customer volume achievement and other factors incorporated into customer agreements, such as new product purchases, store sell-through, merchandising support, and customer training. Management adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations). We ship some of our products to customers’ distribution centers on a consignment basis. We retain title to our products stored at the distribution centers. As our products are removed from the distribution centers by retailers and shipped to retailers’ stores, title passes from us to the retailers. At that time, we invoice the retailers and recognize revenue for these consignment transactions. We do not offer a right of return for products shipped to the retailers’ stores from the distribution centers. NOTE 3. EARNINGS PER SHARE Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is based upon the weighted-average number of shares of common stock outstanding, plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method. This method requires that the effect of potentially dilutive common stock equivalents (stock options, stock-settled appreciation rights, restricted stock units, and performance stock units) be excluded from the calculation of diluted earnings per share for the periods in which losses are reported because the effect is anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share (dollar and share amounts in millions, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net Income $ 54 $ 160 $ 145 $ 267 Weighted average common shares outstanding - basic 70 72 70 72 Dilutive effect of employee stock plans — — — — Shares used for diluted earnings per share 70 72 70 72 Net income per share of common stock: Basic $ 0.77 $ 2.23 $ 2.08 $ 3.72 Diluted $ 0.77 $ 2.23 $ 2.07 $ 3.71 NOTE 4. FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We are required to classify these financial assets and liabilities into two groups: (i) recurring—measured on a periodic basis, and (ii) non-recurring—measured on an as-needed basis. There are three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. 12 Level 2 Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable or can be corroborated by observable market data. Level 3 Valuations based on models where significant inputs are not observable. Unobservable inputs are used when little or no market data is available and reflect the Company’s own assumptions about the assumptions market participants would use. The Company's financial instruments consist of cash and cash equivalents, short-term receivables, trade payables, debt instruments, and trading securities. Carrying amounts reported on the balance sheet for cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term maturity of these instruments. The net carrying value of the 3.625 % Senior Notes due in 2029 (2029 Senior Notes) was $ 348 million as of June 30, 2025 and December 31, 2024. Based on market quotations, the fair value of the 2029 Senior Notes was estimated to be $ 333 million and $ 323 million as of June 30, 2025 and December 31, 2024, respectively. The 2029 Senior Notes and other long-term debt are categorized as Level 1 in the U.S. GAAP fair value hierarchy. Fair values are based on trading activity among the Company’s lenders and the average bid and ask price is determined using published rates. In March 2025, LP entered into the First Amendment to Second Amended and Restated Credit Agreement (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 that certain Second Amended and Restated Credit Agreement (the Credit Agreement) that was entered into in November 2022. The First Amendment amended the Credit Agreement to (1) increase the aggregate principal amount for the credit facility (the Amended 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 pursuant to the Amended Credit Facility. NOTE 5. RECEIVABLES Receivables consisted of the following (dollar amounts in millions): June 30, 2025 December 31, 2024 Trade receivables $ 146 $ 100 Income tax receivable 5 12 Other receivables 18 21 Allowance for doubtful accounts ( 1 ) ( 1 ) Total Receivables $ 168 $ 131 Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables as of June 30, 2025, and December 31, 2024, primarily consisted of sales tax receivables, vendor rebates, and other miscellaneous receivables. 13 NOTE 6. INVENTORIES Inventories are valued at the lower of cost or net realizable value. Inventory cost includes materials, labor, and operating overhead. The first-in, first-out or average cost methods are used to value our inventories as of June 30, 2025. Inventory consisted of the following (dollar amounts in millions): June 30, 2025 December 31, 2024 Logs $ 56 $ 64 Other raw materials 45 41 Semi-finished inventories 31 33 Finished products 238 220 Total Inventories $ 370 $ 357 NOTE 7. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and indefinite-lived intangible assets are not amortized and are subject to assessment for impairment by applying a fair value-based test on an annual basis, or more frequently if circumstances indicate a potential impairment. The Company’s annual assessment date is October 1. Changes in goodwill and other intangible assets for the six months ended June 30, 2025 are provided in the following table (dollar amounts in millions): Timber Licenses 1 Goodwill Developed Technology Beginning balance December 31, 2024 $ 23 $ 19 $ 7 Amortization ( 1 ) — ( 1 ) Ending balance June 30, 2025 $ 22 $ 19 $ 6 1 Timber licenses are included in timber and timberlands on the Condensed Consolidated Balance Sheets. The Company regularly evaluates the estimated useful lives of its definite-lived intangible assets. During the quarter ended June 30, 2025, the Company revised its estimate of the useful lives of its developed technology to better reflect the period over which the asset is expected to be utilized. The developed technology previously had a remaining useful life of ten years and is now being amortized over a revised useful life of one year. This revision in estimate resulted in a quarterly increase of $2 million in amortization expense. NOTE 8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities were as follows (dollars amounts in millions): June 30, 2025 December 31, 2024 Trade accounts payable $ 156 $ 139 Salaries and wages payable 57 80 Accrued customer incentives 51 48 Taxes other than income taxes 9 4 Current portion of operating lease liabilities 8 8 Other accrued liabilities 9 9 Total Accounts payable and accrued liabilities $ 290 $ 287 Other accrued liabilities at June 30, 2025, and December 31, 2024, primarily consisted of accrued interest, worker compensation liabilities, and warranty reserves. Additionally, trade accounts payable included $ 26 million and $ 32 million related to capital expenditures that had not yet been paid as of June 30, 2025, and December 31, 2024, respectively. 14 NOTE 9. INCOME TAXES For interim periods, income tax expense is recognized by applying the estimated annual effective tax rate to year-to-date results, unless doing so does not yield a reliable estimate. Each period, the income tax accrual is updated based on the latest estimate, and any difference from the previously accrued year-to-date balance is recorded in the current quarter. Changes in profitability estimates across jurisdictions may affect quarterly effective tax rates. The provision for income taxes for the six months ended June 30, 2025, and 2024, reflected estimated annual effective tax rates of 26 % and 25 %, respectively, excluding discrete items discussed below. The total tax provision for the three and six months ended June 30, 2025, was $ 19 million and $ 45 million, respectively, compared to $ 53 million and $ 94 million for the corresponding periods in 2024, respectively. The effective tax rate, including discrete items, for the three and six months ended June 30, 2025, was 26 % and 24 %, respectively, compared to 25 % and 26 % for the comparable periods in 2024. During the six months ended June 30, 2025, a net discrete tax benefit of $ 4 million was recognized, compared to a net discrete tax expense of $ 4 million for the same period in 2024. The benefit in the current year was primarily attributable to inflationary and foreign currency exchange-related effects, as well as stock-based compensation. The prior year's expense was mainly driven by similar inflationary and foreign currency exchange-related impacts. In 2021, the Organization for Economic Cooperation and Development (OECD) announced an Inclusive Framework on Base Erosion and Profit Shifting, including the Pillar Two Model Rules (Pillar Two), applicable to large multinational corporations. These rules establish a global per-country minimum tax of 15%. Although, the United States has not enacted legislation to adopt the Pillar Two framework, and future adoption remains uncertain, certain countries where operations are conducted have enacted such legislation. Specifically, the Canadian government enacted legislation in 2024 implementing aspects of the OECD’s minimum tax rules under the Pillar Two framework, effective for the 2024 fiscal year, and proposed additional legislation to implement further aspects effective in the 2025 fiscal year. Additionally, in 2024, the Brazilian Congress approved legislation-effective in 2025-that is largely aligned with certain aspects of the OECD’s minimum tax rules under the Pillar Two framework. To date, no other jurisdictions in which LP operates have enacted Pillar Two legislation. At this time, Pillar Two legislation is not expected to have a material impact on the Company's effective tax rate, consolidated results of operations, financial position, or cash flows. The Company will continue to monitor future developments related to Pillar Two legislation to assess any potential impact in the relevant jurisdictions. On July 4, 2025, H.R. 1, a bill to provide for reconciliation pursuant to title II of H. Con. Res. 14, informally known as the “One Big Beautiful Bill Act” (OBBBA) was enacted in the U.S. The OBBBA includes significant provisions, such as permanent extension of certain expiring elements of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework, and the restoration of favorable tax treatment for specific business provisions. Certain provisions are effective in 2025, while others will be implemented through 2027. Given that the legislation was signed into law after the close of the second quarter, its impacts are not included in the operating results for the six months ended June 30, 2025. The potential effects on the consolidated financial statements are currently under evaluation. 15 NOTE 10. OTHER OPERATING AND NON-OPERATING ITEMS Other operating credits and charges, net Other operating credits and charges, net, is comprised of the following components (dollar amounts in millions): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Reorganization charges $ ( 3 ) $ ( 1 ) $ ( 5 ) $ ( 3 ) Legal settlement — — — 3 Loss on asset disposal — — ( 1 ) — Other 2 3 2 3 Other operating credits and charges, net $ ( 2 ) $ 2 $ ( 4 ) $ 3 Other non-operating items Other non-operating items is comprised of the following components (dollar amounts in millions): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Foreign currency gain (loss) $ ( 7 ) $ 5 $ ( 12 ) $ 6 Other non-operating items $ ( 7 ) $ 5 $ ( 12 ) $ 6 NOTE 11. IMPAIRMENT OF LONG-LIVED 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. 16 NOTE 12. COMMITMENTS AND CONTINGENCIES Reserves for various contingent liabilities were as follows (dollar amounts in millions): June 30, 2025 December 31, 2024 Environmental reserves $ 27 $ 28 Total contingencies 27 28 Current portion (included in Accounts payable and accrued liabilities) ( 1 ) ( 1 ) Long-term portion $ 26 $ 27 Estimates of loss contingencies are based on various assumptions and judgments. Due to the numerous uncertainties and variables associated with these assumptions and judgments, both the precision and reliability of the resulting estimates are subject to substantial uncertainty. Estimated exposure to contingencies is regularly monitored, and as additional information becomes available, estimates may change significantly. Although no estimate of the range of any such change can be made at this time, the amount ultimately paid in connection with these matters could materially exceed, in either the near term or the longer term, the amounts accrued to date. Estimates of loss contingencies do not reflect potential future recoveries from insurance carriers, except to the extent that recovery is deemed probable based on an insurer’s agreement to payment terms. Environmental Matters A reserve is maintained for undiscounted estimated environmental loss contingencies. This reserve primarily covers estimated future costs for the remediation of hazardous or toxic substances at various sites currently or previously owned by the Company. Estimates of environmental loss contingencies are based on a range of assumptions and judgments, which vary depending on the specific facts and circumstances of each case. These estimates typically reflect management's assumptions regarding the probable nature, magnitude, and timing of required investigation, remediation, and/or monitoring activities, as well as the probable costs associated with those activities. In some cases, estimates also consider the obligation, willingness, or ability of third parties to bear a proportionate or allocated share of the costs. Due to the numerous uncertainties and variables associated with these assumptions and judgments-as well as the potential effects of changes in governmental regulations and environmental technologies-the precision and reliability of the resulting estimates are subject to substantial uncertainty. Estimated exposure to environmental loss contingencies is regularly monitored, and estimates may be revised significantly as additional information becomes available. Other Proceedings From time to time, the Company and its subsidiaries are parties to certain legal proceedings arising in our ordinary course of business. Based on currently available information, management does not believe that the resolution of such proceedings could reasonably be expected to have a material adverse effect on the Company's financial position, results of operations, cash flows, or liquidity. 17 NOTE 13. PRODUCT WARRANTIES Warranties are offered on the sale of most of our products, and an accrual is recorded for estimated future claims. These accruals are based upon historical experience and management’s estimate of future claim levels. The activity in the warranty reserves for the three and six months ended June 30, 2025, and 2024, is summarized in the following table (dollar amounts in millions): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Beginning balance $ 6 $ 8 $ 6 $ 8 Change in warranty provision — 1 — 1 Payments made — — ( 1 ) ( 1 ) Total warranty reserves 6 8 6 8 Current portion of warranty reserves (included in accounts payable and accrued liabilities) ( 2 ) ( 2 ) ( 2 ) ( 2 ) Long-term portion of warranty reserves (included in other long-term liabilities) $ 4 $ 6 $ 4 $ 6 Warranty and other product-related claims continue to be monitored by management, and as of June 30, 2025, the warranty reserve balances associated with these matters are considered adequate to cover future warranty payments. However, additional adjustments may be required in the future. NOTE 14. ACCUMULATED COMPREHENSIVE LOSS Accumulated comprehensive loss is provided in the following table for the three and six months ended June 30, 2025 and 2024 (dollar amounts in millions): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Beginning Balance $ ( 110 ) $ ( 104 ) $ ( 122 ) $ ( 89 ) Translation Adjustments 6 ( 4 ) 18 ( 20 ) Ending Balance $ ( 104 ) $ ( 109 ) $ ( 104 ) $ ( 109 ) NOTE 15. SELECTED SEGMENT DATA The Company operates in three segments: Siding, OSB, and LPSA. Our business units have been aggregated into these three segments based upon the similarity of economic characteristics, customers, and distribution methods. The results of operations are summarized below for each of these segments separately, as well as for the “Other” category, which comprises other products that are not individually significant. • The Siding segment serves diverse end markets with a broad product portfolio of engineered wood siding, trim, soffit, 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). • The OSB segment manufactures and distributes OSB structural panel products, including the innovative value-added OSB product portfolio known as LP ® Structural Solutions (which includes LP ® TechShield ® Radiant Barrier, LP WeatherLogic ® Air & Water Barrier, LP Legacy ® Premium Sub-Flooring, LP NovaCore ® Thermal Insulated Sheathing, LP ® FlameBlock ® Fire-Rated Sheathing, LP ® TopNotch ® 350 Durable Sub-Flooring) and LP ® Oriented Strand Board. 18 • The LPSA segment manufactures and distributes OSB structural panel and Siding Solutions products in South America and certain export markets. This segment also sells and distributes a variety of companion products to support the region’s transition to wood frame construction. The LPSA segment carries out manufacturing operations in Chile and Brazil and operates sales offices in Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru. Performance of our business segments is evaluated based on net sales and segment Adjusted EBITDA. Accordingly, our chief operating decision maker, the chief executive officer, evaluates performance and allocates resources based primarily on net sales and segment Adjusted EBITDA for each business segment. Segment Adjusted EBITDA is defined as income attributed to LP excluding interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense, loss on impairment attributed to LP, business exit credits and charges, product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, pension settlement charges, other non-operating items, income from discontinued operations, net of income taxes, and net income attributed to noncontrolling interest. Information regarding the Company's business segments is presented below (dollar amounts in millions): 19 Three Months Ended June 30, 2025 Siding OSB LPSA Segment Total Other Consolidated Net sales $ 460 $ 250 $ 43 $ 753 $ 2 $ 755 Cost of sales ( 314 ) ( 229 ) ( 31 ) ( 573 ) ( 3 ) ( 577 ) Selling, general, and administrative expenses ( 44 ) ( 18 ) ( 6 ) ( 67 ) ( 13 ) ( 79 ) Adjustments to Adjusted EBITDA: Depreciation and amortization 20 13 2 36 — 36 Other charges 1 2 2 1 4 4 8 Adjusted EBITDA $ 125 $ 19 $ 9 $ 153 $ ( 10 ) $ 142 Three Months Ended June 30, 2024 Siding OSB LPSA Segment Total Other Consolidated Net sales $ 415 $ 351 $ 46 $ 812 $ 2 $ 814 Cost of sales ( 291 ) ( 222 ) ( 34 ) ( 548 ) ( 3 ) ( 551 ) Selling, general, and administrative expenses ( 39 ) ( 15 ) ( 4 ) ( 58 ) ( 13 ) ( 71 ) Adjustments to Adjusted EBITDA: Depreciation and amortization 19 11 2 31 — 31 Other charges 1 1 1 — 2 3 5 Adjusted EBITDA $ 105 $ 125 $ 10 $ 240 $ ( 11 ) $ 229 Six Months Ended June 30, 2025 Siding OSB LPSA Segment Total Other Consolidated Net sales $ 862 $ 517 $ 95 $ 1,474 $ 4 $ 1,478 Cost of sales ( 590 ) ( 440 ) ( 68 ) ( 1,097 ) ( 6 ) ( 1,103 ) Selling, general, and administrative expenses ( 85 ) ( 34 ) ( 12 ) ( 131 ) ( 24 ) ( 154 ) Adjustments to Adjusted EBITDA: Depreciation and amortization 40 26 4 70 — 70 Other charges 1 3 3 1 7 6 13 Adjusted EBITDA $ 230 $ 73 $ 21 $ 324 $ ( 20 ) $ 304 Six Months Ended June 30, 2024 Siding OSB LPSA Segment Total Other Consolidated Net sales $ 776 $ 664 $ 93 $ 1,533 $ 5 $ 1,539 Cost of sales ( 546 ) ( 441 ) ( 69 ) ( 1,056 ) ( 6 ) ( 1,062 ) Selling, general, and administrative expenses ( 75 ) ( 31 ) ( 8 ) ( 114 ) ( 26 ) ( 140 ) Adjustments to Adjusted EBITDA: Depreciation and amortization 37 22 3 62 — 62 Other charges 1 3 1 — 4 8 12 Adjusted EBITDA $ 195 $ 215 $ 20 $ 429 $ ( 19 ) $ 411 1 Other charges includes stock compensation and income from equity in unconsolidated affiliates. 20 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 NET INCOME TO ADJUSTED EBITDA RECONCILIATION Net income $ 54 $ 160 $ 145 $ 267 Add (deduct): Provision for income taxes 19 53 45 94 Depreciation and amortization 36 31 70 62 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 and charges — ( 14 ) — ( 15 ) Interest expense 4 4 7 8 Investment income ( 4 ) ( 6 ) ( 8 ) ( 11 ) Other non-operating items 7 ( 5 ) 12 ( 6 ) Adjusted EBITDA $ 142 $ 229 $ 304 $ 411 Information concerning identifiable assets by segment is as follows (dollar amounts in millions): June 30, 2025 December 31, 2024 Identifiable Assets Siding $ 1,351 $ 1,319 OSB 556 554 LPSA 165 145 Other 584 551 Total assets $ 2,656 $ 2,569 Other segment related assets include cash and cash equivalents, short-term and long-term investments, corporate assets, and other items. 21