Louisiana-Pacific(LPX) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements The company presents its unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025 and 2024 Q2 & H1 2025 vs 2024 Financial Highlights (in millions, except per share data) | Financial Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $755 | $814 | $1,478 | $1,539 | | Gross Profit | $178 | $263 | $375 | $477 | | Net Income | $54 | $160 | $145 | $267 | | Diluted EPS | $0.77 | $2.23 | $2.07 | $3.71 | Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $895 | $855 | | Total Assets | $2,656 | $2,569 | | Total Current Liabilities | $315 | $299 | | Total Liabilities | $914 | $899 | | Total Stockholders' Equity | $1,742 | $1,671 | Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $226 | $317 | | Net Cash used in Investing Activities | $(132) | $(61) | | Net Cash used in Financing Activities | $(105) | $(157) | | Net (Decrease) Increase in Cash | $(7) | $95 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes on key accounting policies and events supporting the financial statements Revenue by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Siding | $460 | $415 | $862 | $776 | | OSB | $250 | $351 | $517 | $664 | | LPSA | $43 | $46 | $95 | $93 | | Total Net Sales | $755 | $814 | $1,478 | $1,539 | - In Q2 2025, the company recorded $17 million in non-cash, pre-tax impairment charges related to underutilized equipment and a facility closure[63] Adjusted EBITDA by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Siding | $125 | $105 | $230 | $195 | | OSB | $19 | $125 | $73 | $215 | | LPSA | $9 | $10 | $21 | $20 | | Total Adjusted EBITDA | $142 | $229 | $304 | $411 | - In March 2025, the company amended its credit agreement, increasing the credit facility from $550 million to $750 million and extending the maturity to March 2032[47] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, market trends, and segment performance - Demand for building products was mixed in H1 2025, with single-family housing starts decreasing by 7% while multi-family housing starts increased by 17%[80][93] - The company estimates it could incur approximately $12 million in incremental costs in 2025 due to new or increased tariffs, primarily impacting the Siding segment[82] Sales Volume (in Million Square Feet - MMSF) | Product Line | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Siding Solutions | 505 | 465 | 950 | 876 | | OSB - Structural Solutions | 578 | 588 | 1,127 | 1,161 | | OSB - commodity | 430 | 415 | 856 | 830 | Results of Operations This section details the financial performance of the Siding, OSB, and LPSA operating segments for Q2 and H1 2025 versus 2024 - The Siding segment's net sales grew 11% YoY for both Q2 and H1 2025, driven by an 8% increase in unit shipments and a 2% price increase in Q2[98][99] - The OSB segment's net sales fell 29% YoY in Q2 2025, primarily due to a significant drop in average net selling prices for both Structural Solutions (-27%) and commodity OSB (-33%)[101] - The LPSA segment's net sales decreased by 7% in Q2 2025 compared to Q2 2024, mainly due to lower OSB prices[104] - Selling, general, and administrative (SG&A) expenses increased to $79 million in Q2 2025 from $71 million in Q2 2024, primarily due to higher employee compensation[107] Liquidity and Capital Resources The company's financial liquidity, cash flows, capital allocation strategy, and credit facilities are detailed - Cash provided by operations decreased to $226 million in H1 2025 from $317 million in H1 2024, primarily due to lower net income and changes in working capital[113] - Capital expenditures are expected to be approximately $350 million in 2025, a significant increase from the $132 million spent in H1 2025[115][114] - In H1 2025, the company used $105 million in financing activities, which included $61 million for share repurchases and $39 million for dividend payments[116] - As of June 30, 2025, there were no outstanding borrowings under the amended $750 million credit facility, and the company was in compliance with all financial covenants[119][120] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's exposure to market risks such as foreign currency, commodity price, and interest rate fluctuations is discussed - The company is exposed to foreign currency risk, primarily from the U.S. dollar's fluctuation against the Canadian dollar, Brazilian real, and Chilean peso[127] - The most significant commodity price risk is related to OSB, as sales prices fluctuate based on market factors beyond the company's control[128] - Interest rate risk is present due to a variable rate credit facility, but as of June 30, 2025, there were no outstanding borrowings, mitigating this risk[129] Item 4. Controls and Procedures Management confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[130] - No material changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2025[131] PART II - OTHER INFORMATION Item 1. Legal Proceedings This section references Note 12 for information on the company's legal and environmental matters - Information regarding legal and environmental matters is incorporated by reference from "Note 12. Commitments and Contingencies" in the financial statements[133] Item 1A. Risk Factors No material changes to risk factors disclosed in the 2024 Annual Report on Form 10-K are reported - There have been no material changes to the risk factors disclosed in the company's 2024 Annual Report on Form 10-K[134] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section updates the status of the company's share repurchase program and remaining authorization - The company did not repurchase any of its common stock during the quarter ended June 30, 2025[136] - As of June 30, 2025, an aggregate of $177 million of repurchase authorization remained under the 2024 Share Repurchase Program[136]