LOUISIANA-PACIFIC CORP (LPX)

Results of Operations

The Company conducts business through two reportable segments: Siding and OSB. Other comprises our South American operations and other products and services that are not individually significant. See “Note 11. Selected Segment Data” of the Notes to the Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” of this quarterly report on Form 10-Q for further information regarding our segments.

Siding

The Siding segment serves diverse end markets with a broad product portfolio of engineered wood siding, trim, soffit, and fascia. Our Siding is offered primed (LP® SmartSide® Trim & Siding, LP BuilderSeries® Lap Siding, and LP® Outdoor Building Solutions®) and prefinished (LP® SmartSide® ExpertFinish® Trim & Siding) to meet the needs of builders and installers in new construction and repair and remodeling applications.

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

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

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Percent changes in average net sales prices and unit shipments in Siding for the three and six months ended June 30, 2026, compared to the corresponding periods in 2025, were as follows:

Siding net sales decreased for the three and six months ended June 30, 2026 due to lower volumes, partially offset by higher prices. The increase in pricing was attributable to both the annual price increase and favorable mix.

Adjusted EBITDA declined by $12 million in the quarter and $16 million year to date compared with the same periods in 2025. Net price increases contributed $27 million in the quarter and $54 million year to date, while lower volumes reduced results by $24 million and $59 million, respectively. Raw material, freight, and labor costs also increased by $10 million in the quarter and $15 million year to date, including a $4 million impact from higher crude oil costs in the second quarter.$16 million, respectively. Net price increases contributed $27 million in the quarter and $54 million year to date, which were offset by lower volumes of $24 million for the quarter and $59 million year to date. For the three and six months ended June 30, 2026, costs for raw materials, freight, and labor increased by $10 million and $12 million, respectively, including $4 million related to higher crude oil prices in the second quarter.

OSB

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® FlameBlock® Fire-Rated Sheathing, LP BurnGuard® FRT OSB, LP WeatherLogic® Air & Water Barrier, LP® TechShield® Radiant Barrier Sheathing, LP Legacy® Premium Sub-Flooring, and LP® TopNotch® 350 Durable Sub-Flooring).

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

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

Percent changes in average net sales prices and unit shipments in OSB for the three and six months ended June 30, 2026, compared to the corresponding periods in 2025, were as follows:

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For the three and six months ended June 30, 2026, OSB net sales decreased year over year by $68 million and $167 million, respectively, primarily driven by lower OSB prices and a decline in sales volumes.

Adjusted EBITDA for the same periods decreased year over year by $40 million and $106 million, respectively, reflecting the impact of lower OSB prices and a decline in sales volumes.

Other

Other operations include our South American business that manufactures and distributes OSB structural panels and siding products in South America and certain export markets. Other operations also include timber and timberlands as well as other products, services, and closed operations, which do not qualify as discontinued operations. Additionally, Other includes unallocated corporate expenses.

Other net sales decreased by $3 million and $12 million, for the three and six months ended June 30, 2026, respectively, primarily due to a decline in OSB selling prices in South America. Adjusted EBITDA for the same periods decreased year over year by $12 million and $20 million, respectively, driven by a decline in South America net sales along with higher costs incurred in that market.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $80 million and $158 million for the three and six months ended June 30, 2026, respectively, compared to $79 million and $154 million for the corresponding periods in 2025. The year-over-year increase in selling, general, and administrative expenses was due to higher inflationary costs.

Income Taxes

We recognized a total tax provision of $8 million and $17 million in the three and six months ended June 30, 2026, respectively, compared to $19 million and $45 million for the corresponding periods in 2025. Each quarter, 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. For the six months ended June 30, 2026, the primary differences between the U.S. statutory rate of 21% and the total effective tax rate of 24% relate to foreign income tax and inflationary and foreign currency exchange-related adjustments. For the six months ended June 30, 2025, the primary differences between the U.S. statutory rate of 21% and the total effective tax rate of 24% relate to state income tax and inflationary and foreign currency exchange-related adjustments.

Legal and Environmental Matters

For a discussion of legal and environmental matters involving us and the potential impact thereof on our financial position, results of operations, and cash flows, see Items 3, 7, and 8 in our 2025 Annual Report on Form 10-K and “Note 9. Commitments and Contingencies” of the Notes to the Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” of this quarterly report on Form 10-Q.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are existing cash and investment balances, cash generated by our operations, and our ability to borrow under such credit facilities as we may have in effect from time to time. We assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements. As such, we project our anticipated cash requirements as well as cash flows generated from operating activities to meet those needs. We anticipate that long-term cash uses may also include strategic acquisitions. On a long-term basis, we expect to rely on our credit facilities in effect from time to time for any long-term funding not provided by operating cash flows. We may also, from time to time, issue and sell equity, debt, or hybrid securities or engage in other capital market transactions.

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Our principal uses of liquidity are paying the costs and expenses associated with our operations, servicing outstanding indebtedness, paying dividends, and making capital expenditures. We may also, from time to time, prepay or repurchase outstanding indebtedness or shares or acquire assets or businesses that are complementary to our operations. Any such share repurchases may be commenced, suspended, discontinued, or resumed, and the method or methods of effecting any such repurchases may be changed, at any time, or from time to time, without prior notice.

We expect to fund our capital expenditures over at least the next 12 months through cash on hand, cash generated from operations, and available borrowing under our Amended Credit Facility, as necessary.

Operating Activities

During the six months ended June 30, 2026, cash provided by operations was $102 million. During the same period in 2025, cash provided by operations was $226 million. The decrease in cash provided by operations was primarily related to lower net income and changes in working capital.

Investing Activities

During the six months ended June 30, 2026 and 2025, cash used in investing activities was $120 million and $132 million, respectively, relating to capital expenditures.

Capital expenditures in 2026 are expected to be approximately $320 million. We expect to fund our short-term and long-term capital expenditures in 2026 through cash on hand, cash generated from operations, and available borrowing under our Amended Credit Facility, as necessary.

Financing Activities

During the six months ended June 30, 2026, cash used in financing activities was $47 million, which included $42 million of cash dividends paid and $5 million to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

During the six months ended June 30, 2025, cash used in financing activities was $105 million, which included $61 million for share repurchases of LP common stock under the 2024 Share Repurchase Program (as defined below). 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.

Credit Facility and Letter of Credit Facility

In November 2022, LP entered

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ITEM 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this annual report on Form 10-K, and with Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for our fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025, which provides a discussion of our financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023. The changes to our reportable segments in the current year did not have a material impact on our previously reported consolidated results of operations or financial position. Prior‑period segment information has been recast to conform to the current period presentation. The following discussion includes 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. We encourage you to review the risks and uncertainties described in the sections titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” above. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

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OVERVIEW

General

We are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide. We have leveraged our expertise serving the new home construction, repair and remodeling, and outdoor structures markets to become an industry leader known for innovation, quality, and reliability. To serve these markets, we operate in two reportable segments: Siding and OSB.

Executive Summary

In 2025, net sales dropped year over year by $233 million to $2.7 billion. Siding revenue increased by $131 million, or 8%, to $1.7 billion, attributable to 4% higher sales volumes and a 4% increase in prices. OSB revenue fell by $352 million to $832 million, primarily due to lower prices and sales volumes.

Net income declined year over year by $275 million to $146 million ($2.08 per diluted share). The primary drivers behind this decrease were a $252 million reduction in Adjusted EBITDA, and increases of $38 million in impairment charges, $24 million in foreign currency losses, $19 million in depreciation expense, and $10 million in stock-based compensation. Additionally, the absence of $14 million in business exit credits recognized in 2024 and a $7 million decrease in investment income contributed to the overall decline. These impacts were partially offset by a $90 million reduction in the tax provision. The year-over-year decrease in Adjusted EBITDA was driven by several factors, including a $292 million adverse effect from lower OSB prices and reduced sales volumes, partially offset by $91 million from higher Siding sales volumes and improved sales mix. In addition to price and volume impacts, the change in Adjusted EBITDA included increases of $11 million in marketing investments, $9 million in selling, general, and administrative expenses, $7 million of mill overhead and inventory absorption, and $8 million in tariff costs. The remaining decrease in Adjusted EBITDA relates to a decline of $15 million in Other Adjusted EBITDA, which primarily includes LPSA, corporate, and other minor products and services. Adjusted EBITDA is a non-GAAP Financial measure. Please see "Non-GAAP Financial Measures" below for more information about our use of non-GAAP financial measures in this annual report on Form 10-K and the reconciliation of Adjusted EBITDA to net income.

Demand for Building Products

Demand for our products correlates positively with new home construction and repair and remodeling activity in North America, which historically have been characterized by significant cyclicality. The U.S. Census Bureau published actual U.S. housing starts data on January 9, 2026. The U.S. Census Bureau reported on January 9, 2026, that 2025 actual single-family housing starts were 6% lower than those in 2024. Actual multi-family housing starts in 2025 were about 18% higher than those in 2024. Repair and remodeling activity is difficult to reasonably measure, but many indications suggest that repair and remodeling activity has declined modestly year-over-year.

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. 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 potential effect of these factors on our future operational and financial performance is uncertain. As a result, our past performance may not be indicative of future results.

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The chart below, which is based on data published by U.S. Census Bureau, provides a graphical summary of new housing starts for single- and multi-family in the U.S., showing actual and rolling five- and ten-year averages for housing starts (in thousands).

November and December 2025 housing starts have not yet been published by the U.S. Census Bureau, and therefore, for the purpose of the chart above, we have used October 2025 housing starts previously published by the U.S. Census Bureau as the November and December 2025 actual housing starts.

Supply and Demand for Siding

Our Siding products are specialty building materials and are subject to competition from various siding technologies, including vinyl, stucco, wood, fiber cement, brick, and others. We believe we are the largest manufacturer of engineered wood siding in North America and South America. The global siding market is estimated to be approximately $120 billion of annual expenditure. We have consistently grown our Siding business above the underlying market growth rates. Our Siding business is generally less sensitive to new housing market cyclicality since a majority of its demand comes from other markets, including off-site structure producers and repair and remodel. Our growth in this market depends upon the continued displacement of vinyl, stucco, wood, fiber cement, brick, 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

OSB is a commodity product, and it is subject to competition from manufacturers worldwide. Product supply is influenced primarily by fluctuations in available manufacturing capacity and imports. The ratio of overall OSB demand to capacity generally drives price. We cannot predict whether the prices of our OSB products will remain at current levels or increase or decrease in the future.

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CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make informed estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our financial position and/or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information. Our significant accounting policies are disclosed in “Note 1 - Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements and included in Item 8 of this annual report on Form 10-K. The following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates.

Long-lived Assets

Property, plant and equipment, and long-lived assets (including amortizable identifiable intangible assets) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable, including but not limited to facility curtailments and asset abandonments. When such events occur, we group long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows exist. We compare the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group to the carrying amount of a long-lived asset or asset group. The cash flows are based on our best estimate of future cash flows derived from the most recent business projections. The significant assumptions used to determine estimated cash flows are the cash inflows and outflows directly resulting from the use of those assets in operations, including sales volume, product pricing, support costs, and other costs to operate. We recognize an impairment loss if the amount of the asset’s carrying value exceeds the asset’s estimated fair value. Fair value is estimated primarily using discounted expected future cash flows on a market-participant basis. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new cost basis is depreciated (amortized) over the remaining estimated useful life of that asset.

Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. We have not made any material changes in our impairment loss assessment methodology in the periods presented. We do not believe a material change in the estimates or assumptions that we use to calculate long-lived asset impairments is likely. However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.

Revenue Recognition, Including Customer Program Costs

Revenue is recognized when obligations under the terms of a contract (e.g., purchase orders) with our customers are satisfied; generally, this occurs with the transfer of control of our products to the customer 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.

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, including rebates and promotion and volume allowances, 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 limited to, volume allowances and rebates, promotional allowances, and cooperative advertising programs. These costs are recorded at the later of the time of sale or the implementation of the program based on management’s best estimates.

Our 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-t

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